PLN: Zloty Holds Onto Gains After EUR/PLN Breaches Another Round Figure

Bears managed to force a breach of 4.20 as EUR/PLN sank to fresh multi-year lows yesterday, as renewed greenback sales coincided with the NBP presser reaffirming the central bank's hawkish stance. The pair clings onto those gains this morning, last trading flat at 4.1894. Our technical analyst flags 4.1822, the 2.764 projection of the Nov 6 - 7 - 12 ‘24 price swing, as the next layer of support of note. On the flip side, a return above the 4.20 figure would give bulls some initial reprieve, before they set their sights on the 50-EMA/next round figure at 4.2490/4.2500.

• Governor Glapinski reiterated that inflation is expected to stay above the target for the remainder of this year and rebound in Q4 despite a temporary moderation in Q3. As a result, in his view, there are no grounds for lowering interest rates. Despite the confirmation of his hawkish bias, our sense was that the presser was marginally less hawkish than last month. The Governor admitted that the next move in rates will likely be down and listed some downside risks to the inflation outlook.
  • Right after the press conference, ING economists wrote on X that the Governor slightly moderated the tone of his rhetoric, although they could not identify the reason for it. In the subsequent discussion, they said that concerns about being outvoted may have played a role. In their opinion, "the experience with the start of the cycle," which involved 100bp worth of easing over two months in autumn 2023, "suggests that the inauguration of the second phase of cuts can also be spectacular" as opposed to limited to a 25bp move.
• POLGB yields have ticked higher across the curve. The WIG20 Index has added 0.6% today.