UBS forecasts a rise in the zloty due to German spending and a ceasefire in Ukraine.

UBS has updated its outlook on the Polish zloty, noting that Germany's plans to increase defense and infrastructure spending are expected to positively impact the European growth outlook, which will also benefit the zloty's performance against the US dollar. The Swiss financial services firm highlighted that the potential advantages of a possible ceasefire in Ukraine have strengthened sentiment toward European currencies in recent months.

However, UBS cautioned that the implementation of tariffs could lead to a short-term weakening of the zloty against the dollar. The company identified key risks that could cause a long-term decline in the USD/PLN exchange rate, including persistent high tariffs, renewed strength in US economic data, higher-than-expected inflation, and the failure of ceasefire negotiations or Russia's advances in Ukraine. In this context, UBS revised its quarterly forecasts for the USD/PLN exchange rate, indicating a more favorable outlook for the Polish currency against the dollar.