European Central Bank Distributes Cards – Nervous Wait for June
Polish zloty continues to hold a strong position in the currency basket of Central and Eastern Europe. The domestic currency is driven by relatively high NBP interest rates, solid GDP growth, and clear signs of economic revival in our main trading partner, Germany. Nevertheless, investors betting on further strengthening of the PLN must now buckle up hard, as any sudden wave of global risk aversion (commonly called a “risk‑off” state) will instantly hit emerging market assets.
The key turning point for the pair EUR/PLN will be the EBC meeting scheduled for June 10‑11. Market speculation is growing that hawks in Frankfurt may speak up, especially if gas and energy prices in Europe once again start driving inflation. A restrictive EBC statement and the specter of further rate hikes will hit the zloty, pushing the EUR/PLN rate into the 4.28‑4.30 range. Conversely, dovish tones will open the door to a test of the 4.20 level.
On May 17 the EUR/PLN rate was 4.24 (data from Friday, May 15).
Chart. Euro to zloty rate (EUR/PLN)
Source: Trading Economics
See also: Euro waiting for EBC move! How will EUR/USD and EUR/PLN react? The market holds its breath
American Rollercoaster, i.e., the USD/PLN trapped by the Fed
The currency pair USD/PLN also promises excitement. In theory, the widespread expectation of further Fed rate cuts should push the USD down and reward the PLN. In practice, however, the American currency regularly activates its “safe haven” status with every stronger global risk and geopolitical tension. Investors closely monitor macro market indicators, trying to predict whether slower rate cuts in the USA will pressure emerging markets.
It is worth noting that at the upcoming June Fed meeting, a rate cut is unlikely due to persistently high inflation and the energy shock triggered by the war in Iran.
Medium‑term forecasts are highly polarized. MUFG experts outline a very bold scenario for the zloty, predicting a USD/PLN decline even near 3.36 by the end of 2026. On the other side, PKO BP analysts forecast a strong stabilization of the rate well above, in the safe range of 3.65‑3.70.
On May 17 the USD/PLN rate was 3.65 (data from Friday, May 15).
Chart. Dollar to zloty rate (USD/PLN)
Source: Trading Economics
See also: The Federal Reserve will bet on AI? Bankers warn. Warsh will soon replace Powell
British Chaos vs. High Rates. Where is GBP/PLN heading?
The pound sterling is currently navigating a complex slalom between economic theory and brutal political play. Prime Minister Keir Starmer must extinguish serious fires within the Labour Party, political competition in the form of Reform UK and Nigel Farage keeps pressing him, and clear social tensions and mass protests continually infect markets with uncertainty about the UK economy. Moreover, the global strength of the USD indirectly affects pound behavior, further complicating the situation.
Under normal conditions, the GBP would lose momentum, but it has a strong ally on its side. The Bank of England firmly maintains relatively high rates, and the market assumes it will cut them much more slowly than the US Fed. For the pair GBP/PLN, this means a period of heightened volatility. Further escalation of the political crisis in the UK will drag the pound down, while calming sentiment will allow it to maintain its current stable position.
On May 17 the GBP/PLN rate was 4.86 (data from Friday, May 15).
Chart. Pound to zloty rate (GBP/PLN)
Source: Trading Economics
See also: The United Kingdom in financial distress. What’s happening keeps investors up at night
Source: BBC
