The Pound Sterling to Polish Zloty (GBP/PLN) exchange rate tumbled on Wednesday as the Polish central bank swore tackle the fallout created by last week’s surprise decision by the Swiss National Bank and as Sterling was weakened by domestic data.
After the SNB’s decision to scrap the cap with the Euro the Polish currency tumbled as concerns were raised over the impact on 550,000 Polish homeowners who have to repay mortgages denominated in Swiss Francs. With the Franc’s sharp rise those mortgages become far more expensive than they were previously.
Head of the Polish Central Bank, Marek Belka said that he saw room for making more interest rate cuts but added that the bank will hold fire until the foreign exchange market settles. Following the SNB decision, the Zloty tumbled against the Swiss Franc and weakened sharply against the Pound and other major peers.
‘I still think there is a case for monetary easing. At the press conference after last week’s Monetary Policy Council, I said that during turbulence in the foreign exchange markets is not the best time to cut rates. It is in our interest for it to be relatively stable,’ said Mr Belka.
Bank of England (BoE) Minutes Batter Sterling
The Pound is forecast to continue to remain under pressure against the Zloty and other peers as the latest Bank of Englan policy meeting minutes showed that the monetary policy committee voted unanimously to leave interest rates unchanged, a change from previous reports which showed that was some disagreement. With inflation falling sharply last month the board agreed that a rate hike should be delayed.
‘For the two members who had voted in the previous month for an increase in Bank Rate, the decision this month was finely balanced. They noted the risk that low inflation might persist for longer than the temporary factors implied and concluded that this risk would be increased by an increase in Bank Rate at the current juncture,’ the minutes said.
The release of the minutes sent the Pound tumbling and the currency received more negativity as average earnings data disappointed economists.
Earnings excluding bonuses were expected to improve by 1.9%; instead, they rose by just 1.8%. Earnings including bonuses held edged higher to 1.7% matching expectations.
The Pound Sterling to Polish Zloty Exchange Rate is trading in the region of 5.64
