The low earlier hit 1.0357 (this may vary depending on your platform but definitely under 1.0400), which was an all-time low for the currency in the modern era so to speak. In part, a stronger dollar has definitely pushed GBP/USD over the edge from a technical perspective but there is also plenty to scrutinise about Friday's policy announcement - which has led to UK bonds imploding.
In any case, there is a bit of appetite now as cable rebounds back to 1.0740 although it is hard to imagine this be but profit-taking and some light pressure being relieved after such a sharp move since the end of last week.
The bigger question now for the pound is, will the BOE intervene in the market in some manner to arrest the decline in the currency?
As mentioned earlier, an emergency rate hike is the most plausible option considering that the UK does not really have a significant chunk of FX reserves - no point burning through that at this stage. However, the big concern for policymakers surely is that what happens if they choose to raise the bank rate by 200 to 300 bps and still the pound ends up trading lower? What then?
There's a big risk associated with intervening with Black Wednesday serving as a painful reminder of that.
