Central European foreign exchange markets experienced mixed signals following recent PMI and inflation data, according to Frantisek Taborsky at ING. The latest PMI readings showed a divergence within the region, with the Czech Republic displaying strong positive sentiment, while Poland's PMI unexpectedly declined. Despite this, ING maintains its expectation for Polish economic growth to exceed 3% in 2026, citing that recent Polish data does not indicate a significant change in economic direction [1].
Polish inflation data released on Tuesday surprised to the downside, contributing to expectations of a dovish stance from the National Bank of Poland (NBP) at its July meeting next week. This dovish outlook is reflected in market pricing, which currently anticipates around 10 basis points of rate cuts next year. The EUR/PLN currency pair tested levels above 4.300 but encountered strong resistance, rebounding lower to around 4.290. ING notes that a move above 4.300 would likely require a significantly dovish signal from the NBP, but there is little reason to expect the zloty to strengthen in the near term [1].
Elsewhere in the region, the Czech koruna saw some strengthening, with the EUR/CZK exchange rate following interest rate differentials and currently pointing to levels around 24.200. The Hungarian forint has stabilized, with EUR/HUF trading in the 355-356 range, and ING's bias remains for a potential move lower, suggesting a range of 350-356 for the second half of the year [1].
CONCLUSION
Recent mixed PMI and inflation data have kept the Polish zloty capped, with market participants anticipating a dovish outlook from the National Bank of Poland. While the Czech koruna has strengthened and the Hungarian forint remains stable, the overall sentiment for the zloty remains subdued, with little expectation for near-term appreciation.