Poland's Zloty: A Strategic Play for 2026 Amid UBS Outlook and Macroeconomic Tailwinds

In the ever-shifting landscape of global macro investing, Poland's zloty (PLN) is emerging as a compelling case study for forex traders and macro investors. With UBS forecasting stability against major currencies and Poland's economy defying regional headwinds, the PLN offers a unique blend of carry trade appeal and emerging market resilience. This article unpacks why EUR/PLN and USD/PLN could become strategic plays in 2026, driven by divergent monetary policies, robust growth, and the euro's relative fragility.

UBS's 2026 Forecast: Stability Anchored by Growth and Carry Advantage

UBS has maintained its 2026 quarterly forecasts for the Polish zloty, predicting EUR/PLN to trade at 4.20, 4.20, 4.23, and 4.23 for Q1 through Q4, while USD/PLN is expected to hover around 3.50–3.53. This stability is underpinned by Poland's "robust growth outlook" and the zloty's carry advantage over the euro. The National Bank of Poland (NBP) is nearing the end of its monetary easing cycle, with interest rate cuts largely priced in, reducing volatility risks. Meanwhile, Germany's potential economic rebound could provide further tailwinds for the zloty, as stronger regional demand boosts Poland's export-driven economy.

Poland's Macroeconomic Resilience: A Carry Trade Magnet

Poland's appeal as a carry trade destination stems from its favorable macroeconomic profile. The NBP is projected to keep rates steady at 5.75% in 2026, outpacing the Eurozone and U.S., where central banks face more constrained policy paths. This differential creates a natural incentive for investors to borrow in lower-yielding currencies like the euro or dollar and invest in PLN-denominated assets.

Poland's GDP growth is forecast to reach 3.5% in 2026, outperforming the Eurozone's 1.4%. This growth is fueled by EU-funded investments through programs like the Recovery and Resilience Facility (RRF) and Security Action for Europe (SAFE), which are channeling capital into infrastructure, green energy, and defense. Controlled inflation (2.9% in 2026) and a skilled labor force further enhance the country's attractiveness.

Foreign direct investment (FDI) is also surging, driven by Poland's strategic location, EU membership, and business-friendly reforms. Sectors like green energy and digital infrastructure are drawing capital, reinforcing the zloty's resilience against external shocks .

The Euro's Weakness: A Tailwind for EUR/PLN

The euro's relative fragility in 2026 amplifies the case for EUR/PLN as a carry trade. The Eurozone faces a delicate balancing act: the ECB is expected to cut rates if inflation undershoots its 2% target but may hike again if defense and infrastructure spending trigger inflationary pressures. Meanwhile, Poland's GDP outperformance and limited room for NBP rate cuts create a natural floor for the zloty.

External pressures, including U.S. tariffs and competition from China, could further weigh on the euro. EUR/PLN is projected to trade within 4.20–4.30 in 2026, with near-term strengthening followed by a gradual decline as fiscal risks rise ahead of the 2027 elections. This volatility creates opportunities for tactical positioning in EUR/PLN, particularly as the euro's structural vulnerabilities-such as its open economy and exposure to global supply chains- remain unresolved.

Risks and Long-Term Considerations

While the short-term outlook is bullish, investors must remain mindful of Poland's long-term challenges. Public debt is expected to rise from 55.1% of GDP in 2024 to 69.2% by 2027, limiting fiscal flexibility. Additionally, geopolitical risks-such as Russian military provocation or political tensions- could disrupt the zloty's stability. However, these risks are largely priced in, and Poland's structural strengths (EU integration, FDI inflows, and a diversified economy) provide a buffer.

Conclusion: A Strategic Macro Play for 2026

Poland's zloty is uniquely positioned to benefit from divergent monetary policies, robust growth, and the euro's relative weakness. UBS's forecasts, combined with Poland's carry trade appeal and EU-driven economic momentum, make EUR/PLN and USD/PLN compelling plays for forex traders and macro investors. While risks exist, the zloty's resilience and Poland's macroeconomic fundamentals suggest that the currency will remain a key player in the CEE region's outperformance story.