PLN: Weak Data Fail To Prevent Zloty Appreciation

The zloty trades on a firmer footing, in spite of the release of weak retail sales and construction output data out of Poland. When this is being typed, EUR/PLN trades 83 pips below neutral levels at 4.2793. The 4.25 area provides the initial bearish target, with the focus falling on 4.2471, which limited losses on May 28 and again on Jul 15. Bulls see Jul 2 high of 4.3321 as their key initial target.

• The second batch of June economic activity data was rather weak, with real retail sales growth slowing to +4.4% Y/Y against expectations of an acceleration to +5.3%. Construction output shrank by 8.9% Y/Y, notably more than expected, with some pointing to the impact of a cyclical pause in EU-funded investments. A couple of desks suggested that the data for Q2 cast doubt on their GDP growth forecasts for 2024.
• MPC's Iwona Duda said that central bankers could discuss rate cuts in 2H2025, when inflation is expected to start cooling again after topping out above +6% Y/Y. Wage growth remains a source of concern, keeping core inflation elevated.
• POLGB yields are a touch lower across the curve, with 5s outperforming as we type. The WIG20 Index has added 0.3%.