The current market bias for the GBP to PLN exchange rate is range-bound.
Key drivers include the interest rate differential, as the Bank of England (BoE) is expected to reduce rates amidst slowing inflation and economic growth, potentially down to 3.25% by mid-2026. In contrast, the National Bank of Poland (NBP) recently cut rates to 4.00% to manage inflation at the target midpoint while GDP growth remains strong. Furthermore, inflation trends support the pound, with forecasts suggesting a decline to the BoE's 2% target, while the zloty benefits from stable growth projections.
The near-term trading range is expected to remain stable, oscillating around recent levels, having traded between 4.7858 and 4.9093 in the last three months. An upside risk is a quicker-than-expected economic recovery in the UK, boosting the pound. Conversely, a downside risk could stem from increased fiscal concerns that may lead to more significant rate cuts by the BoE, which could weaken the pound further.