Are you a Polish citizen thinking of immigrating to the UK, or a Brit living in Poland planning to repatriate to Great Britain? Alternatively, are you a Polish business owner, exporting and importing with the UK, and making frequent international payments?
If so, it may help you to know that the Polish zloty to pounds interbank exchange rate has hit a 10-week high today. The value of the Polish zloty versus British sterling has reached 0.2036 at the time of writing.
This is the zloty's highest point against the pound since March 3rd 2019, or more than 10 weeks.
By contrast, back on May 6th, the zloty was as weak as 0.1987 versus the pound. So, it's since strengthened by +2.46%.
At today's interbank exchange rate of 0.2036, 2,500,000zł would be worth £509,000. By contrast, at the interbank exchange rate on May 6th of 0.1987, 2,500,000zł would have been worth just £496,750.
So, as the interbank exchange rate has risen, the same Polish zloty amount would now be worth an extra £12,250, compared to 10 days ago.
Given this, when you transfer money to the UK from Poland, you could now get a significantly higher pound total in your British bank account, compared to if you'd transferred money recently.
Whether you're emigrating or buying property in the UK, or exchanging currencies for your business, a higher sterling total might be of benefit to you.
A first reason why the Polish zloty to pounds interbank exchange rate has hit this 10-week high is because Poland's GDP rose faster than forecast in early 2019.
In addition, a further factor for this rise in PLN to GBP is because Poland's inflation has climbed, lifting the chances that the National Bank of Poland (NBP) might soon lift interest rates.
Let's look more closely at these explanations why the zloty to sterling exchange rate has risen. This may help to decide when to transfer money to the UK from Poland in 2019.
Zloty to Pound Strengthens, as Polish GDP Beats Forecasts
A first factor why the Polish zloty to pounds interbank exchange rate has hit this 10-week high is because Poland's GDP (Gross Domestic Product) expanded faster than forecast in Q1.
In particular, Poland's economy expanded by +4.6% between January and March compared to a year ago, said the Central Statistical Office (CSO) this Wednesday 15th May. This is above forecasts for +4.6% growth.
Poland's economy grew faster than forecast in the first three months of this year, in spite of the economic slowdown in the neighbouring Eurozone. This was Poland's ninth consecutive quarter of GDP expansion.
Poland's economy grew, buoyed by higher industrial production and exports. These made up for a slowdown in retail sales.
Poland's CSO said about these statistics that: "The Polish economy proved to be resilient to the gloomier external environment and sustained solid growth."
In addition, looking ahead, Poland's economy could continue to grow briskly. This is because it's an election year in Poland, and the Warsaw central government is spending US$11 billion in stimulus, to win votes.
These optimistic GDP growth figures have increased the value of the zloty versus the pound, because when Poland's economy expands, there are more investment opportunities in Poland.
In turn, this encourages international money managers to buy the zloty, to invest in Polish assets. This raises the financial markets' demand for zloty, thus lifting its value.
PLN to GBP Climbs, as NBP May Hike Interest Rates
In addition, another reason why the Polish zloty has touched this 10-week high versus the pound is because the financial markets are factoring in the possibility that the National Bank of Poland (NBP) might lift interest rates in the foreseeable future. This is because Poland's inflation has risen to within the NBP's target range.
This Wednesday 15th May, Poland's central bank kept interest rates at 1.5%, as widely forecast by economists. the NBP has now held borrowing costs steady for four years, since 2015.
In particular, the National Bank's Governor, Adam Glapinski, played down the possibility that rising inflation would force the NBP to hike rates.
However, even though Poland's central bank kept interest rates steady this week, Poland's inflation climbed by +0.5%, to 2.2% in April.
This is within the National Bank of Poland's target range of 1.5-3.5%, following an extended stretch of low price growth. In April, Poland's inflation was driven by higher food and transportation prices.
Moreover, six members of the National Bank of Poland's 10-member Monetary Policy Committee (MPC) say that higher interest rates may be needed in the next year, if prices rise faster than forecast, according to the MPC's latest minutes.
As a result, even with Mr. Glapinski's remarks, the NBP might lift interest rates above 1.5%.
When central banks hike interest rates, this makes taking out loans more expensive. In turn, this puts a lid on rising price pressures, or inflation.
However, as a side effect of higher interest rates, returns on Polish assets rises in value. So this strengthens the Polish zloty versus the pound, as global money managers expect the NBP to hike interest rates.
Zloty Rises Versus Pound, as Tories Pressure May to Resign
Also, an additional explation why the Polish zloty to pounds interbank exchange rate has touched this 10-week high is because, in the UK, the Conservative Party is putting more pressure on Prime Minister Theresa May to announce her resignation date. Just today, two more senior Tories have added to calls for Mrs. May to stand aside.
There's been rising pressure on the Prime Minister to resign, even since Mrs. May made public that she'd leave office, as soon as Brexit is complete.
Since then, more and more Conservative members have called for Mrs. May to go, both because she's perceived to be a dead duck, and because she's negotiating with the opposition Labour Party to reach a Brexit deal.
For example, just today, the Chairwoman of the House of Commons’ influential Treasury Select Committee, Nicky Morgan, called for Mrs. May to resign.
Mrs. Morgan told financial website Bloomberg that: "she is going to have to hand over to somebody else to see whether that change of momentum, that change in leadership, is able to make that difference."
Meanwhile, Labour's Shadow Brexit Spokesman, Keir Starmer, has said that it's "perfectly clear" that Mrs. May's forthcoming fourth attempt to pass her Brexit bill through the House of Commons "will fail".
This is because the Prime Minister is yet to agree a cross-party deal with Labour over Brexit, to ensure a majority among MPs in Parliament.
This has contributed to weaken the pound, because financial markets are concerned that, if Mrs. May resigns, she'll be replaced by a more pro-Brexit Prime Minister, who might pursue a "No Deal" Brexit, against the UK's best economic interests.
So this uncertainty has helped further lift the value of the Polish zloty versus sterling today.
Get A Free Exchange Rate Quote
Get a free exchange rate quote to get a highly competitive exchange rate, and find out how much you could save with Pure FX.
You’ll get a highly competitive exchange rate for your money transfer.
Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email [email protected]