FXStreet (Edinburgh) – The outlook for the Polish zloty remains on the neutral side so far, suggested strategists at BAML.
Key Quotes
“We are on track to our 3.5% growth forecast for 2015. Industrial production growth recovered to 5.3% yoy in May from a soft April reading of 2.7% in seasonally and working-day adjusted terms, maintaining the growth momentum at the beginning of the year”.
“The robust 1Q growth rate, with recent PLN weakness and an increase in political uncertainty, implies the National Bank of Poland will stay neutral. The Monetary Policy Council has been sending strong signals to the market about its intention to end the easing cycle. The recent PLN weakness eased the MPC’s concerns about higher risks of inflation undershooting. Our baseline has the policy rate steady at 1.50% through 2016, and we note that the risk of easing has fallen significantly”.
“Bund volatility and Greece talks are a risk to sentiment in the region, including that for PLN. We stay neutral outright but hold a short PLN/HUF position, as the cross seems overvalued from a longer-term perspective”.
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