Polish Zloty: Downtrend eyes 4.48 on firm support – Societe Generale

Societe Generale’s Central and Eastern European (CEE) strategy team expects the National Bank of Poland (NBP) to keep rates at 3.75% today, with Governor Glapiński likely to flag inflation risks and prepare markets for a November hike. They see a hawkish stance offering some Polish Zloty (PLN) support but still expect EUR/PLN to trade above 4.35 given geopolitical and external risks, after the pair extended gains toward 4.40/4.41 resistance.

Zloty supported but risks linger

"EUR/PLN has extended its up move after recently crossing the July/August peaks at 4.34. The pair is gradually heading towards the upper boundary of a multi-month ascending channel at 4.40/4.41, which could act as an interim resistance zone."

"Signals of a deep pullback are not yet visible, the August peak at 4.34 may serve as a key support. Only a break below this would denote the risk of a deeper decline."

"A move above 4.40/4.41 could trigger a larger uptrend towards the next projections at 4.45 and 4.48."

"In CEE, we expect the NBP to stay on hold at 3.75% this afternoon. Inflation accelerated above the upper band of the NBP tolerance band at 4% in September, though today’s meeting should serve as a bridge towards renewed tightening."

"Tomorrow, Governor Glapiński is likely to signal growing concern over inflation risks and prepare markets for a hike in November, when updated staff forecasts will be released. While a hawkish stance could provide some support to the zloty, EUR/PLN is likely to remain above 4.35 amid persistent geopolitical and external risks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)