Outlook
Poland’s inflation fell to 2.4% in December 2025, aligning with the NBP target and stoking expectations of potential rate cuts in 2026. However, Moody’s negative outlook in 2025 for Poland’s credit quality and rising public debt may cap PLN gains. UBS has kept its EUR/PLN forecast at 4.20 for Q1–Q2 2026 and 4.23 for Q3–Q4 2026, noting the zloty’s growth momentum and carry advantage over the euro. Ongoing geopolitical risks around Ukraine and broader trade tensions add a layer of uncertainty. Overall, the PLN looks set to stay range-bound near current levels, with upside if inflation undershoots and policy easing is absorbed, but downside if fiscal risks intensify or geopolitics worsen.
Key drivers
- Inflation cooling toward target supports possible 2026 rate cuts, potentially weighing on near-term yields but sustaining a longer-term PLN narrative guided by growth.
- Carry advantage and Poland’s robust growth underpin PLN resilience, with UBS forecasts suggesting the zloty can hold firm against euro and dollar through 2026.
- Moody’s negative outlook flags higher budget deficits and debt trajectories, posing a headwind for PLN if fiscal risk materials into market sentiment.
- Geopolitical risks around Ukraine and trade tensions remain a brake on investor confidence and could trigger risk-off moves that weaken PLN.
- Domestic growth and export strength continue to support the zloty, though policy pacing (rate cuts) could temper the carry picture.
- Global risk appetite and USD/ECB policy paths will feed into PLN via cross-market flows and carry dynamics.
Range
PLN/USD: current near 0.2812; 7-day range 0.2694–0.2867; 3-month average 0.2766.
PLN/EUR: current near 0.2372; 7-day range 0.2347–0.2383; 3-month average near the current level.
PLN/GBP: current near 0.2054; 7-day range 0.2052–0.2089; 3-month average 0.2069.
PLN/JPY: current near 43.61; 7-day range 41.39–44.33; 3-month average 43.15.
What could change it
- Unforeseen inflation or wage data that shifts expectations for NBP policy and timing of rate cuts.
- A shift in fiscal trajectory or a Moody’s rating action intensifying concerns about deficits and debt.
- Escalation or resolution in Ukraine-related tensions affecting Poland’s trade and investment climate.
- Shifts in global central bank paths or risk sentiment that alter carry flows and cross-market dynamics.
- Any revision to UBS or other major forecasts that changes the perceived carry or growth backdrop for PLN.
