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TF
tf/forex
108
tf/forex•Posted by u/forex_sarah•

GBP/JPY the juiciest carry trade of 2026 — but watch the risk

The rate differential between the BoE (4.75%) and the BoJ (0.25%) makes GBP/JPY incredibly attractive for carry trade. You earn +$18/lot/day just by staying long.

The problem: the BOJ is getting closer to tightening. Ueda signaled that ultra-accommodative policy "cannot last forever." If the BOJ hikes to 0.50%, the yen strengthens and the carry trade reverses violently.

My position: long GBP/JPY at 50% of usual size. The carry is too good to ignore but the reversal risk is real.

5 Comments

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macro_man·edited

Carry trade is picking up pennies in front of a steamroller. When it turns, you lose 3 months of carry in 24 hours.

56
trader_mike·edited

"Mental" stop? Set a real stop. Yen flash crashes happen while you're sleeping.

72
forex_sarahOP·edited

That's why I'm at 50% size. And I have a mental stop at 191.00. If it breaks below I'm out, no hesitation.

28
algo_trader_42·edited

Does anyone have historical data on what happens when the BOJ hikes rates during an active carry trade? I'd like to quantify the drawdown risk.

34
commodity_chris·edited

I prefer AUD/JPY for carry. Less volatile than GBP/JPY and the swap is almost as good.

19