Outrageous Predictions
Carry trade unwind brings USD/JPY to 100 and Japan’s next asset bubble
Charu Chanana
Chief Investment Strategist
Sterling is under pressure again as UK fiscal credibility concerns, sticky inflation risks and weak growth collide with a stronger dollar backdrop. That mix is uncomfortable: the market can tolerate weak growth, and it can tolerate higher yields, but it gets nervous when both arrive with questions around policy discipline.
GBP/USD is trading near 1.3350, having slipped below key moving averages. That keeps the bias softer unless sterling can reclaim the mid-1.34s quickly.

Levels to watch
What drives it
Positioning lens
Risk
Levels to watch
What drives it
Positioning lens
Risk
This is not 2022 yet, but sterling is starting to trade with a familiar question: is the UK policy mix credible enough?
For now, GBP/USD looks vulnerable while below 1.3430–1.3480. A break of 1.3325 would make the downside look more serious, while only a recovery above 1.3515 would suggest the market is moving away from the “Truss moment” comparison.