UBS revised its quarterly forecasts for the US dollar against the Polish zloty (), citing a range of factors including the potential challenges Europe and Poland could face from Donald Trump’s possible second presidency, robust US economic data and moderate European figures.
The new projections see an increase from 4.14 to 4.35 for the first quarter of 2025, with subsequent quarters showing similar upward adjustments.
The Swiss financial services firm expects that tackling high budget deficits in the US and reducing negative factors in Europe could ultimately lead to a reversal of the USD’s recent gains. UBS also noted the strong performance of the US dollar following Trump’s election, driven by growth-supporting aspects of his agenda, potential inflationary effects and continued strong US economic data.
The U.S. government’s trade policies could also initially increase the U.S. dollar’s appeal. However, UBS expects that market attention will eventually shift to aspects of Trump’s agenda that could have a negative impact on the US dollar, such as high budget deficits and the impact of tariffs on US growth. While Poland has limited direct trade exposure to the US, it is integrated into the broader European economy and could be affected by a reduction in US support and a potential decline in NATO involvement.
In terms of economic outlook, UBS predicts that Poland’s real GDP growth will be around 3% annualized in 2024, with an expected acceleration to 3.5% in 2025 due to significant EU funds. The budget deficit is expected to remain high, with risks of slippage during an election year. Polish monetary policy maintained the key interest rate at 5.75% in January, with the National Bank of Poland (NBP) signaling that inflation may persist due to energy prices.
Looking ahead to the Polish presidential elections, the first round is scheduled for May 18. The outcome could impact the zloty, with a victory by Civic Platform candidate Rafal Trzaskowski expected to facilitate the passage of key legislation, potentially strengthening the currency. Conversely, a victory for Law and Justice-backed candidate Karol Nawrocki could lead to legislative deadlock, potentially dampening sentiment.
UBS also warns that continued US economic strength and off-target inflation could lead the Federal Reserve to reassess its rate-cutting path, which could support the dollar for an extended period.
Furthermore, aggressive US trade tariffs may initially benefit the dollar, potentially pushing USDPLN above the 4.40 level. Conversely, effective absorption of EU funds or an exchange of these funds on the market amid moderating US activity could support the zloty.
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