Zloty Depreciates, Political Risk In Focus

EUR/PLN changes hands +87 pips at 4.3609, staying below the 50-EMA, which kicks in at 4.3685. A clearance of that moving average would signal potential for a firmer bullish move. Bears look for a sell-off towards Dec 13 low of 4.2935 and Mar 4, 2020 low of 4.2870.

• The Constitutional Tribunal ruled that the current procedure of putting the NBP Governor on trial is inconsistent with Poland's organic law and needs to be revised, which derailed calls from some lawmakers to prosecute the current central bank chief. This comes after the NBP left interest rates unchanged for the third consecutive time earlier this week (see our review here).
• Political risk remains front and centre, with the President opening a procedure to pardon two imprisoned officials. However, divisions between the President and the new ruling coalition over the legality of their earlier pardoning remain.
• POLGB yields sit 4.0-5.3bp lower across the curve, with a degree of flattening evident and with the premium over Bund yields extending its recent decline. Polish FRA contracts have inched lower this morning.