EMEA FX Talking: Zloty weakness looks temporary
At a Glance
The current outlook for the Polish zloty (PLN) suggests that its recent weakness is likely to be temporary. Per the full note from ing-think, the dovish stance of the National Bank of Poland (NBP) has pressured the PLN, with EUR/PLN recently testing the 4.35 mark, its highest level in over 18 months. However, factors such as projected EU fund inflows in the latter half of 2026 and strong GDP growth indicate that underlying fundamentals may not support a sustained depreciation of the zloty. Analysts believe that while the NBP's dovish tone raises the possibility of rate cuts, significant resistance remains to implementing them anytime soon, keeping our forecast for EUR/PLN trending back toward 4.25 for the next year.
Key Takeaways
- 01PLN weakness driven by dovish NBP outlook, likely temporary.
- 02Strong GDP growth and expected EU fund inflows should mitigate long-term depreciation.
- 03Current EUR/PLN level around 4.35 unlikely to hold; target returning to 4.25.
- 04Potential for NBP to delay rate cuts until 2027, supporting PLN stability.
Full Analysis
What the desk is arguing
The PLN's recent depreciation is viewed as a short-term phenomenon influenced by a softer NBP outlook rather than economic fundamentals. The desk frames this as a transitory condition driven largely by central bank communications, as outlined in the commentary by ing-think.
Furthermore, while the NBP is seen as dovish, expectations for rate cuts may not materialize until 2027, keeping rates stable through 2026. This decouples the PLN's movements from poor economic performance, as Poland anticipates significant EU fund inflows.
Where it sits in our coverage
Currently, we observe that several key firms forecast EUR/PLN movements towards 4.25, aligning closely with our desk's outlook. Notable firm targets include: - jpmorgan: 4.30 by Dec-26 - bofa: 4.20 by Dec-26 - hsbc: 4.25 by Dec-26
This perspective aligns with ing-think's forecasts, suggesting a potential near-term rebound toward the lower end of our estimates while resisting deeper declines in the medium to long term.
How other firms see it
Among the aligned firms, jpmorgan and bofa indicate that while the zloty might face pressures, recovery potential exists through policy stabilization and external fund inflows. Meanwhile, hsbc seems more cautious about the PLN's rebound, highlighting concerns over the broader geopolitical climate.
This debate intersects with EUR/USD trends and ECB monetary policy shifts, particularly as adjustments in European economic outlook could influence PLN movements indirectly, reflecting wider regional confidence.
Market Implications
Traders should watch the 4.35 resistance level closely for signs of a reversal, as directional moves beyond 4.30 may prompt further volatility. Given the absence of imminent rate changes from the NBP, positions in EUR/PLN could be ripe for adjustment as market perceptions shift.
From the original
Articles EMEA FX Talking: Zloty weakness looks temporary Published 13:04 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download In the CEE space, the Polish zloty has been hit by a dovish National Bank of Poland. Yet the Polish authorities have plenty of
Related speeches
4 itemsEUR/PLN and USD/PLN Forecast 2026: UBS Reveals Critical Outlook for Poland’s Economic Future - MEXC Exchange
The desk believes that the EUR/PLN and USD/PLN pairs are poised for a significant shift by 2026, driven by Poland's evolving economic landscape and monetary policy adjustments. Per the full note from UBS, the Polish economy is expected to experience moderate growth, with GDP projected to rise by 3.5% annually, which will influence currency valuations. Our analysis aligns with this outlook, suggesting a target of 1.075 for EUR/PLN, reflecting a balanced view of Poland's economic resilience amidst regional challenges. The absence of high-impact events in the next month allows for a focused assessment of these forecasts without immediate market distractions.
EUR/PLN and USD/PLN price forecast for 2026, as per UBS By Investing.com - Investing.com South Africa
UBS's forecast for the EUR/PLN and USD/PLN exchange rates through to 2026 suggests a significant shift in valuation, reflecting a potentially stronger zloty against both the euro and the dollar. This outlook is predicated on expected economic stabilization in Poland, coupled with interest rate trajectories that favor the zloty over the long term.