UBS Euro To Polish Zloty Forecast: PLN Firm As Easing Expectations Already Priced - Exchange Rates UK
At a Glance
UBS argues that the Polish zloty is firm as market expectations for rate easing are already priced in, suggesting limited further upside for EUR/PLN from current levels.
Key Takeaways
- 01UBS views the Polish zloty as firm, with rate cut expectations fully discounted.
- 02Limited downside for PLN against the euro in the near term.
- 03Desk contrasts with bearish consensus expecting further PLN weakness on easing.
Full Analysis
What the desk is arguing
UBS maintains that the Polish zloty will remain resilient against the euro as the market has already fully priced in anticipated monetary easing by the National Bank of Poland. The desk sees limited scope for further PLN weakening given that the repricing of rate cuts is largely complete.
This view is supported by the zloty's recent stability despite dovish central bank rhetoric, indicating that the negative impact of lower rates is already discounted. UBS expects EUR/PLN to trade in a tight range in the near term, with risks skewed to the downside for the euro.
Implicitly, the desk is pushing back against the bearish PLN consensus that assumes further weakness as the NBP proceeds with rate cuts. Instead, they argue the zloty has already adjusted, and any additional easing will have a muted impact.
Market Implications
If UBS is correct, EUR/PLN should remain range-bound, potentially testing the lower end of recent ranges. This would favor long PLN positions, particularly against the euro, and reduce hedging costs for PLN-denominated assets.
From the original
UBS Euro To Polish Zloty Forecast: PLN Firm As Easing Expectations Already Priced Exchange Rates UK
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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.
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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.
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