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Dovish NBP expectations weigh on Polish zloty, ING sees EUR/PLN near 4.340

ING says the market is pricing almost a full additional rate cut by September, a backdrop ING links to further pressure on PLN.

Reported · Written up by our desk · Major Pairs

ING strategists say the Polish zloty is likely to remain under pressure as expectations build for a dovish National Bank of Poland path. FXStreet, citing ING strategist Frantisek Taborsky, points to the combination of a dovish NBP tone and market pricing of future rate cuts as key drivers for PLN weakness.

INGs model work suggests EUR/PLN could move closer to 4.340, with the newsletter noting that the recent NBP press conference sounded clearly dovish. FXStreet adds that markets are assigning more than a 50% probability to a rate cut at the September meeting.

While FXStreet also highlights regional FX softness, ING is described as staying constructive on the Czech koruna and Hungarian forint despite near term weakness. The piece also links the near term risk backdrop to additional FX pressure, citing weekend headlines from the Middle East that could prompt a risk off opening.

FXStreet reports ING expects PLN to stay pressured not only in the immediate term but also beyond, reiterating a bearish stance on PLN this week and over the following period. It also notes that the dovish messaging should weigh on the zloty for longer as those rate cut expectations filter through.

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