PLN uncertainty in near term

The previous three elections have been PLN negative. Most recently the May presidential election was a big surprise compared with pre-election polls and gave rise to a number of uncertainties ahead of Sunday's election. 

"We keep our 3M EUR/PLN forecast at 4.25, but see risks skewed to the upside in the near term", estimates Nordea Bank.

Nordea Bank argues, there are reasons to be a bit cautious on the PLN in the near term: 

1) polls have been far off in several elections including the May Presidential election; 

2) with four to five parties close to the threshold to enter parliament a lot will depend on the distribution of a few votes; 

3) huge market issues like CHF mortgage conversion have been topics in the election.

The most likely result is a clear PiS win with several options to form a government with just one junior coalition partner. This scenario would probably be neutral to the markets on Monday, but keep markets cautious until a new government is in place and a consensus on the likelihood of CHF mortgage conversion has emerged.