Nauseating, upsetting item in the City (6)
I believe the answer is:
emetic
'nauseating' is the definition.
(I've seen this before)
'upsetting item in the city' is the wordplay.
'upsetting' shows that the letters should be reversed in order.
'in the' is an insertion indicator.
'city' becomes 'ec' (the City of London postcode).
'item' back-to-front is 'meti'.
'meti' going within 'ec' is 'EMETIC'.
(Other definitions for emetic that I've seen before include "Medicine used to cause vomiting" , "Inducing vomiting" , "Substance given to make one vomit" , "medicament" , "Vomit-inducing medication" .)