The pound sank because the goverment pledged both tax cuts and spending

without any credible plan to back it up. Refusing to work with the OBR and sacking the top Treasury official increased the perception that they didn't know what they were doing and panicked the markets.

The effect on gilts led to pension funds getting in peril due to their hedging strategies and thus the BoE intervention to prevent a wider crisis. Knock on effects on the mortgage rate mean a 2 year fix is now 6% which is a more relevant indicator than the bounce back in the pound.

There is a wider context, but this was a catastrophe of their own making which smacks of arrogance and a lack of basic economic understanding.

Posted By: Knitted Jesus, Oct 5, 18:01:26