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Investing.com -- UBS has adjusted its forecast for the Polish zloty, citing persistent global trade frictions and domestic political challenges as key factors influencing the currency’s outlook. The bank flattened its EUR/PLN forecast profile to 4.25 through the second quarter of 2026, revising previous projections of 4.25, 4.25, 4.22, and 4.20.
The Swiss bank noted that while trade tensions appear more contained than immediately after "Liberation Day," slumping growth and higher energy prices due to the Middle East conflict pose risks for the zloty. Political factors also weigh on the currency, as the Polish government likely faces continued difficulties promoting its legislative agenda following Karol Nawrocki’s presidential election.
UBS revised its USD/PLN forecasts to 3.66, 3.66, 3.60, and 3.54 for the quarters from Q3 2025 through Q2 2026, adjusting from previous projections of 3.58 and 3.50 for the latter two periods. The bank believes trade risks, domestic politics, and fiscal deficits will be counterbalanced by Poland’s growth outlook and elevated yields.
Despite these challenges, UBS highlighted several positive factors for the zloty, including continued EU fund flows supporting Poland’s growth outlook and potential benefits from German fiscal spending in the medium term. The Polish central bank’s shift to a more hawkish stance, driven by concerns about fiscal consolidation, could also provide support.
The bank expects the dollar to continue depreciating against European currencies in coming quarters, benefiting the zloty, unless Europe is specifically targeted by U.S. trade policies. UBS emphasized that U.S. tariff policy plans have prompted a broader market reassessment of the dollar’s prospects.
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