CEE FX: Mixed PMI and inflation keep zloty capped

CEE FX: Mixed PMI and inflation keep zloty capped – ING

Projected Polish Growth

Expected growth rate for Poland in 2026.

EUR/PLN Resistance Level

4.300

Strong resistance level for the EUR/PLN currency pair.

EUR/HUF Stabilization Range

350-356

Projected range for EUR/HUF in the second half of the year.

§ 01 Executive Snapshot

What: Diverging PMI signals and inflation trends in Central Europe are impacting the Polish zloty.
Who: Frantisek Taborsky from ING, National Bank of Poland (NBP), and regional currencies (zloty, koruna, forint).
Why it matters: The mixed economic indicators may influence monetary policy and currency strength in Central European markets.

The Czech Republic shows strong PMI sentiment, while Poland's PMI has declined, indicating mixed economic conditions.
Polish inflation has surprised on the downside, leading to expectations of modest rate cuts by the NBP of around 10 basis points next year.
EUR/PLN tested levels above 4.300 but faced strong resistance, closing closer to 4.290.

The current economic landscape reflects a divergence in growth and inflation trends across Central European countries, particularly between Poland and the Czech Republic.
These economic indicators are critical as they shape the expectations around monetary policy and currency valuations in the region.

The immediate consequence of the current economic signals may lead to a cautious approach from the NBP, affecting market sentiment around the zloty.
Long-term implications may involve a sustained period of currency volatility as economic performance diverges across Central Europe, particularly if rate cuts materialize.

Potential risk includes regulatory actions or changes in monetary policy that could further impact currency valuations and market stability.
Competition from other currencies in the region may also pose challenges for the zloty, especially if economic fundamentals do not improve.

Upcoming NBP meeting in July will provide insights into future monetary policy directions and potential rate cuts.
Continued monitoring of PMI and inflation data will signal economic trends and influence currency strength moving forward.

§ 07

What is impacting the Polish zloty?

Diverging PMI signals and inflation trends in Central Europe are impacting the Polish zloty.

Why has Polish inflation surprised on the downside?

The unexpected decline in Polish inflation has led to expectations of modest rate cuts by the National Bank of Poland.

How might the NBP respond to current economic signals?

The immediate consequence may lead to a cautious approach from the NBP, affecting market sentiment around the zloty.

When will the NBP meeting take place to discuss monetary policy?

The upcoming NBP meeting is scheduled for July, which will provide insights into future monetary policy directions.