Random recurrent crises notwithstanding, Sterling is being supported by a faster pace of rate hikes than elsewhere, and markets are now pricing a higher peak in the UK than in the eurozone or US. That will support GBP for as long as this unusually close correlation between currencies and short-term rates persists and until the rate outlook changes. 

The UK has a less attractive growth/inflation trade-off than other major economies, something which has been exacerbated by Brexit. The upshot of that will be weaker growth and higher inflation over 2023-2024 than in the Eurozone. 

Sterling can only expect support from higher rates for so long before the growth outlook (and the longer-term interest rate implications of weak growth) takes over. We think that will start to happen in 2H23 as rates approach their peak.