EUR/PLN poised for further downside in 2016 – BAML

By FXStreet FXStreet (Edinburgh) – According to BofA Merrill Lynch Global Research, the cross is seen grinding lower in the next year.

Key Quotes

“Elections uncertainty has been weighing on sentiment since May, but in our view the worst-case outcome is in the price, and the market should soon shift the focus back to Poland’s strong fundamentals”.

“The winning PiS’ large-scale populist pledges were part of its election campaign to attract voters. We believe the incentive to fully deliver on these promises will likely diminish once it is in power, and any implementation will likely be gradual”.

“The budget deficit should thus be kept close to 3% of GDP. Economic growth is running above the 3% potential”.

“PLN provides further support to local bonds – we believe the market is too bearish and a PiS government will not weaken the macro outlook substantially. We expect EUR/PLN to head gradually lower in 2016 upon government formation and less political noise”.
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Source:: FX Street