The Stubborn Polish Inflation Is Anticipated To Continue Persistently Over The Target

According to economists at Commerzbank, the EUR/PLN pair is expected to increase in value over the next few months. This is due to the likelihood of inflation in Poland remaining higher than the target rate. The Euro is forecasted to remain strong until 2023, But then weaken in 2024.


“Since the Zloty has a high-beta relationship with the Euro, if inflation disappoints again in 2024, we predict the EUR/PLN will rise towards 4.75. Although we expect inflation to decrease in the next quarter, triggering a rate-cutting cycle by NBP, we do not believe it will fully reach the target rate, making 2024 a potential negative period for the Polish Zloty.”

The data from yesterday in Poland presented a mixed picture. Industrial production experienced a larger-than-anticipated drop, and it is expected to remain weak in Q3, with some recovery predicted in Q4. Meanwhile, PPI fell more than expected, and wage growth was weaker than anticipated. Although the base effect played a significant role in both cases, the pressure seems to be growing for some labor market easing. Today we will see a second set of data with retail sales and construction numbers. Our forecasts suggest that July saw another month of declining Goods-Retail-Sales, But the situation may be stabilizing due to lower inflation allowing for a return of real growth in wages.

Yesterday’s negative surprise resulted in a decrease of almost 0.5% in the value of the Polish zloty. Nonetheless, higher rates continue to indicate a stronger PLN. We will see today if there is potential for further negative surprises in macro data. Otherwise, we expect a stronger zloty due to Higher Rates, at least below 4.46 EUR/PLN.

EUR/PLN Long (Buy)
Enter At: 4.481697
T.P_1: 4.526351
T.P_2: 4.567185
T.P_3: 4.602750
T.P_4: 4.630411
T.P_5: 4.681783
T.P_6: 4.713396
T.P_7: 4.750000
T.P_8: 4.804605
T.P_9: 4.875243
S.L: 4.377764


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