UBS has adjusted its forecast for the USD/PLN currency pair, citing alterations in the Federal Reserve’s interest rate trajectory and escalating tensions within the Middle East. The Swiss financial institution anticipates the exchange rate to hit 4.10 during the second quarter of 2024, followed by a gradual decline to 3.92 in the first quarter of 2025.
The USD/PLN pairing experienced downward pressure towards the 3.90 level during March and April; however, a reassessment by the market regarding the Fed’s potential rate cuts, coupled with escalating conflicts in the Middle East, contributed to a temporary rally above the 4.10 mark. UBS’s revised forecast suggests a slight reduction in the expected exchange rates for the upcoming quarters, with new projections set at 4.10, 4.02, 3.99, and 3.92 from the second quarter of 2024 to the first quarter of 2025. This adjustment reflects a balance between the possibility of the Fed maintaining a hawkish stance and Poland’s stronger economic growth relative to the European average.
UBS notes that the strength of the US dollar is anticipated to wane as the Federal Reserve embarks on its rate-cutting cycle. However, the Polish zloty faces potential risks from the sluggish growth in Europe and geopolitical uncertainties. The firm suggests that these factors could impact the currency’s performance in the coming months.
