UBS raises USD/PLN forecast amid Trump’s potential influence

UBS revised its quarter-end forecasts for the US greenback in opposition to the Polish zloty (USDPLN), citing a spread of things together with the potential challenges Europe and Poland might face from Donald Trump’s attainable second presidency, sturdy US financial knowledge, and lackluster European figures.

The brand new projections see a rise to 4.35 for the primary quarter of 2025, up from 4.14, and subsequent quarters present related upward changes.

The Swiss monetary providers firm anticipates that the US addressing its excessive fiscal deficits and a diminishing of Europe’s unfavorable components might ultimately result in a reversal of the latest USD positive aspects. UBS additionally famous the sturdy efficiency of the US greenback following Trump’s election, pushed by growth-supportive features of his agenda, potential inflationary impacts, and steady sturdy US financial knowledge.

The US administration’s commerce insurance policies might initially add to the enchantment of the US greenback as nicely. Nonetheless, UBS expects that market focus will ultimately shift to features of Trump’s agenda that would negatively have an effect on the US greenback, comparable to excessive fiscal deficits and the repercussions of tariffs on US progress. Poland, whereas having restricted direct commerce publicity to the US, is built-in into the broader European financial system and might be affected by a discount in US assist and a possible lower in dedication to NATO.

When it comes to financial outlook, UBS forecasts Poland’s actual GDP progress to be round 3% year-on-year in 2024, with an anticipated acceleration to three.5% in 2025 as a result of important EU funds. The fiscal deficit is projected to stay extensive, with dangers of slippage throughout an election 12 months. Poland’s financial coverage has maintained the coverage fee at 5.75% in January, with the Nationwide Financial institution of Poland (NBP) signaling potential inflation persistence as a result of vitality costs.

Looking forward to the Polish presidential election, the primary spherical is scheduled for Could 18. The result might affect the zloty, with a victory by Civic Platform’s candidate Rafal Trzaskowski anticipated to facilitate the passage of key laws, probably bolstering the forex. Conversely, a win by Legislation and Justice backed candidate Karol Nawrocki might result in legislative gridlock, probably dampening sentiment.

UBS additionally cautions that continued US financial power and inflation not aligning with targets might lead the Federal Reserve to reassess its rate-cutting trajectory, which might assist the greenback for an prolonged interval.

Moreover, aggressive commerce tariffs by the US might initially profit the dollar, presumably pushing USDPLN above the 4.40 stage. Conversely, efficient absorption of EU funds or an on-market alternate of those funds amid moderating US exercise might assist the zloty.

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