Injury-hit Liverpool did manager Taylor proud with another battling display. Unlike last time out in the league against Chelsea, however, their efforts went unrewarded.
With skipper Grace Fisk and midfield lynchpin Sam Kerr the latest players to be ruled out with knocks over the international break, Taylor was only able to name a five-player bench that included 16-year-old Maizie Trueman.
Their woes were compounded when Smith scored the opener for Arsenal, a timely reminder of the star quality the Reds now lack.
She left Liverpool in a world-record deal in July, becoming the first £1m player in the women’s game, and her burst of pace and impressive finish lived up to that billing.
What the visitors lacked in numbers, they more than made up for in fight on the pitch, with 32 defensive clearances, six saves from Kirby and a wonderful finish from Olsson putting them on the cusp of another valuable point before hopes were dashed late on.
The outcome means that Liverpool have lost by a single-goal margin five times this season. Such results are tough to take, but running Arsenal close should be a cause for optimism given their many absentees.
A second consecutive solid performance against a top-four side is a further sign of what Liverpool could still achieve under Taylor this season.
The first thing they will hope to do is get the injuries under control, while in January there may be a chance to strengthen. Investing some of the Smith transfer fee could do wonders to bolster a squad that is looking increasingly thin and tired as the winter break approaches.