EUR/PLN Outlook:
Slightly positive, but likely to move sideways, as the rate is near its recent average without a clear driver.
Key drivers:
• Rate gap: The European Central Bank has maintained rates at 2% while the National Bank of Poland continues cutting rates to stimulate growth, creating an imbalanced interest rate environment.
• Risk/commodities: Oil prices have been volatile, trading well above their 3-month average, which could affect inflation dynamics and economic expectations in the Eurozone.
• One macro factor: Eurozone inflation has fallen below the ECB's target, raising questions about potential future rate cuts that could impact the euro's strength.
Range:
EUR/PLN is expected to hold within its recent stability, as it has traded in a tight range.
What could change it:
• Upside risk: A stronger-than-expected recovery in the Eurozone economy could lead to a reassessment of ECB policies.
• Downside risk: Further interest rate cuts by the NBP could exert downward pressure on the zloty against the euro.
