PLN/GBP Outlook:
The PLN/GBP is likely to increase. The exchange rate is currently above its 3-month average and near recent highs, supported by the Polish zloty's strength despite some economic concerns.
Key drivers:
- Rate gap: The National Bank of Poland is under pressure to address significant losses from zloty appreciation, contrasting with the Bank of England's current consideration of interest rate cuts.
- Risk/commodities: Oil prices are stabilizing, affecting trade volumes and impacting both currencies as global trade dynamics evolve.
- One macro factor: Declining inflation in Poland has increased expectations for rate cuts from the NBP, enhancing the zloty’s position relative to the pound.
Range:
Expect the PLN/GBP to hold within its recent range as it navigates these currents, possibly testing upper limits.
What could change it:
- Upside risk: A stronger-than-expected economic recovery in Poland could bolster the zloty further.
- Downside risk: Further signs of weakness in the UK economy may lead to additional pressure on the pound and influence the PLN/GBP negatively.