UBS Euro To Polish Zloty Forecast: PLN Firm As Easing Expectations Already Priced - Exchange Rates UK
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.
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.
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.
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.
Risks to this view
Risks include a more aggressive easing cycle by the NBP than currently priced, or a global risk-off event that would likely boost the euro and weaken the zloty. Conversely, hawkish surprises from the NBP could drive further PLN strength.
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