Wednesday’s macro releases from the Polish economy have strengthened the zloty, which is gaining on the forex market. EUR/PLN is moving toward 4.23. The British pound is also suffering — additionally hit by today’s softer-than-expected inflation data. By contrast, inflation from Canada had the opposite effect, briefly lifting the Canadian dollar yesterday.
Zloty on the offensive
Once again the Polish currency is flexing its muscles against the euro. The EUR/PLN session opened around 4.24 PLN. In the first hours we saw two attempts at upward movement, followed by a clear decline — a sign of meaningful zloty appreciation. This move came in direct response to domestic economic data.
The key print was retail sales in current prices, which rose 6.6% y/y. That was below the 7.2% forecast — but still more than double the previous reading of 3% y/y. The strength is mainly the result of a low base: the comparison is with September 2024, when sales fell 2.2% y/y. In constant prices (inflation-adjusted), retail sales rose 6.4% y/y versus 6.8% expected — but fell 2.5% m/m.
Investors clearly prioritized the year-on-year trend. Despite slightly missing forecasts, accelerating sales are still a pro-inflationary impulse the Monetary Policy Council cannot ignore. In theory, such a reading should dampen appetite for further interest-rate cuts — and that is exactly how markets interpreted it, once again turning favourably toward the zloty this week.
Pound drops to 4.86 PLN
The zloty’s strength is also visible on GBP/PLN, which has fallen three grosz today. The move resembles a two-step staircase.
The first step came at the start of the session with UK CPI data. Headline inflation, expected to accelerate to 4% y/y, instead held at 3.8% y/y. Core inflation also undershot — falling from 3.6% y/y to 3.5% y/y instead of rising to 3.7%. The downside surprise knocked the pound immediately: GBP/PLN slid from 4.89 to 4.87, then dipped another grosz by noon.
The second step lower followed the Polish retail data described above. Today’s UK numbers are a broader drag on the pound across the global FX board — GBP/USD fell from 1.338 to 1.331, while losses are also visible versus the franc and even the currently weak euro.
Is Canada being punished by tariffs?
Yesterday brought inflation data from Canada — a mirror image of the UK numbers. Headline CPI jumped from 1.9% y/y to 2.4% y/y, beating forecasts of 2.3%. Core inflation also climbed — from 2.6% to 2.8% y/y.
With policy rates at 2.5%, this means Canada’s real interest rate is now negative — making imminent rate cuts highly unlikely and even opening the door to potential hikes. As a result, the Canadian dollar strengthened against the US dollar, the euro, and the zloty. Today that move is continuing only versus the struggling euro, while the stronger USD and PLN are partially retracing yesterday’s losses. Around 13:00 on Wednesday, CAD/PLN is attempting to reclaim 2.60 PLN.
Source: CEO.com.pl
