The fundamental support for the zloty came from June real economy data, including retail sales and industrial production figures that beat expectations. Based on this, we estimate that Poland's GDP growth in Q2 2026 could reach 4.0% year‑over‑year. The widening growth advantage of the domestic economy over the eurozone may increase the attractiveness of Polish assets and encourage capital inflows.
Support for the PLN also came from rising expectations of NBP rate hikes, leading to an expanded expected NBP–EBC rate differential.
However, the scale of the zloty's appreciation was limited by the global dollar strengthening and the rise in Brent crude prices to around 100 USD/b, linked to the escalation of the Middle East conflict.
Euro rate – forecast for the current week
The stronger performance of the zloty against the euro is, for now, part of a technical correction scenario supported by improving domestic macro fundamentals. To reverse the weakening trend of the PLN since early June, an improvement in the external environment would also be needed, especially credible signals of de‑escalation in the Middle East and a clear drop in energy commodity prices.
Additional support for the zloty could come from a weaker dollar and falling UST yields, if the FOMC’s mid‑meeting message turned out to be less hawkish than the market expects, currently pricing in two Fed rate hikes by spring 2027.
Given the high uncertainty, mainly due to geopolitical conditions, we cautiously assume that in the current week EURPLN will oscillate in the range 4.3050–4.34.
For USDPLN, the risk remains upside, and the rate could test this year’s peak near 3.8130.
Domestic interest rate market
In the coming week, events on the domestic interest rate market that could support higher bond yields are planned. Consequently, 2‑year bond yields may still hover near 4.45%, and 10‑year yields around 5.75%.
Although we expect declines in the longer term, short‑term arguments for such a scenario are lacking. Bond valuations will also be weighed by the appearance of new supply, which, amid uncertain market conditions, takes on particular significance.
Already on Wednesday, the Ministry of Finance will hold an auction with an offer of about 7–13 billion PLN, and a day later the FPC bond tender will also be conducted by BGK. Additionally, on Friday the GUS will publish July inflation data, which we believe will exceed 3% on an annual basis.
Confirmation of inflationary pressure will be a negative signal for the market, which currently prices in a 25‑basis‑point NBP rate hike in 2026 and 50 basis points in 2027. It should be remembered that expectations for future RPP decisions are largely driven by information coming from the Middle East, and geopolitics will remain a key risk factor in the coming days.
Ongoing tensions on the US‑Iran line and a lack of credible de‑escalation signals may generate pressure to maintain high energy commodity prices, and consequently – potential tightening of monetary policy by major central banks.
In this direction, the ECB has already changed its rhetoric last week, suggesting a possible rate hike at the September meeting. Meanwhile, the Fed will hold a meeting next Wednesday, after which we are highly likely to hear similarly hawkish comments.
