Trading GBP/PLN

GBP/PLN is an attractive exchange rate quote for experienced and savvy investors, due to its high volatility and low liquidity. This page explores some key considerations when trading the GBP to PLN pair online, including an overview of live chart forecast strategies. Find out if you’re ready to start investing in the GBP/PLN today.

Introduction To GBP/PLN

GBP/PLN is a currency pair representing the exchange rate quote of Polish zloty (PLN) against one British pound sterling (GBP). At the time of writing, GBP vs PLN is quoted at a rate of 5.14, which means you need 5.14 zloty to purchase one pound.

As the oldest circulated currency, the British pound has an extensive history, defined by its adoption in the gold standard, the British Empire era, the Bretton Woods system and the impact of the World Wars. The zloty has also experienced a turbulent history after decades of political struggles, hyperinflation and economic crises throughout the 20th century. We’ve dissected the key events below.

The British Pound

Although its origins date back to the Anglo-Saxon period, the modern sterling currency was founded in 1694 when the Bank of England was established. Today, the sterling ranks fourth in the most traded world currencies (making up 12.8% of daily forex turnover) and is also in the top 5 of the world’s reserve currencies.

During the two World Wars, the sterling depreciated dramatically due to severe national debt. After World War I, Prime Minister Winston Churchill re-introduced the gold standard in 1925, though the system was abandoned in 1931.

Towards the end of World War II, the UK joined the Bretton Woods Accords, which designated the USD and GBP as global reserve currencies. Nonetheless, the pound was fixed to the USD, which in turn was pegged to gold. The system was in place until 1971.

From this point, the pound has experienced dramatic ups and downs, owing to political unease during the Thatcher era, Black Wednesday and the 1973 Oil Crisis, to name a few. Since 1992, the pound has been a free-floating currency and despite being a member of the European Union until 2020, the UK never adopted the euro.

The Polish Zloty

As the most traded currency in Central Europe, the Polish zloty (PLN) ranks 22nd in the forex market. The zloty began circulation in 1924 to replace the Polish marka, at a rate of 5.18 zloty per one US dollar. The Mennica Polska, in Warsaw, is the only body permitted to manufacture or mint zloty coins.

In the 1930s, Poland was experiencing an economic crisis and a huge debt burden. Between 1935 and 1939, Poland nationalised its major industries causing the economy to briefly stabilise. However, World War II crippled the economy again, with the government fleeing the country during the Soviet invasion.

After years of communist reforms following World War II, Poland entered into a deep recession between 1978 and 1994, after inflation surged and the zloty devalued. In the 1980s, hyperinflation in the country caused the currency to collapse, alongside poor economic productivity and severe public debt.

In the late 1980s and 1990s, the country was forced to liberalise the economy and transition state enterprises into private hands. From 1993, hyperinflation had reduced and the zloty regained the confidence of foreign investors.

Poland became a member of the European Union in 2004 but has not yet adopted the euro. The country was also the only economy in the EU to avoid recession during the 2008 global financial crisis. Today, the value of the zloty against the euro and the US dollar has been steadily increasing.

Trading GBP/PLN: Pros & Cons

Regardless of experience level, investing in the GBP/PLN pair will be more demanding than major forex pairs and will require a good level of commitment. Whilst there are some clear benefits, traders should also weigh up the various limitations and risks involved.

Pros

• Volatile market – Exotic cross currencies are characterised by highly volatile and fast-moving prices. Experienced traders with a solid risk profile in place can profit from these sudden daily price swings.
• Fast-growing economy – Over the past decade, Poland has developed its economy and enjoyed consistent growth, even after avoiding falling into recession in 2008. It is now ranked in the top 20 economies worldwide in terms of GDP.

Cons

• High risk – As with any volatile market, the tempting opportunities also come with immense risks which can be extremely damaging if traders have not implemented appropriate money management techniques.
• Low liquidity – Due to low liquidity, the GBP/PLN pair is more likely to experience unpredictable volatility and slippage, which many traders prefer to avoid.
• Limited resources – Compared to other more commonly traded pairs, there are limited resources and data relating to GBP/PLN. Traders may therefore find it more difficult to keep on top of the news cycle.
• Wider spreads – Because of lower liquidity in the market, brokers will charge a wider spread on pairs like GBP/PLN. Therefore, trading this pair is more feasible for those with more capital to invest.

What Factors Affect GBP/PLN?

UK Factors

Relative to other nations, the UK enjoys diversity within the financial, exports and manufacturing sectors. In fact, its global status as an economic superpower owes largely to the combination of English, Northern Irish, Scottish and Welsh resources.

Although it is technically classified as a service-based economy, the UK is one of the largest importers and exporters in the world. The nation depends on the banking, insurance and business-support sectors, as well as imports of foreign goods and services. The UK’s top trading partners are the US, Germany, France and the Netherlands, and its top industries include aerospace and pharmaceuticals.

To gauge the health of the economy based on these factors, traders should look out for macroeconomic data such as Gross Domestic Product (GDP). Since 2000, the UK experienced a significant downturn in GDP, compared to the highs of the 1970s and 1980s.

You can also find reports of inflation indicators, such as the Consumer Price Index (CPI) and interest rates, which are set by the Bank of England. Trade balances are also important in determining the performance of imports and exports in the UK.

More recently, political factors and other world events have been key drivers of economic performance in the UK. The Brexit vote, for example, has initiated severe uncertainty in the region since 2016. In 2020, the pound dropped to its lowest level against the dollar since 1985, due to the Coronavirus pandemic.

Poland Factors

The zloty has experienced a turbulent and chaotic valuation history, caused by numerous political-economic challenges and hyperinflation. Today, the country is still transitioning from post-communism to a capitalist economy.

The GDP per person is below the EU average and many inhabitants are still living in poverty. Reports on macroeconomic data and GDP will be important factors to watch when trading PLN against any currency.

The Polish central bank is the Narodowy Bank Polski (NBP), which implements monetary policies and aims to maintain price stability. Since 1998, the body has also been responsible for maintaining its inflation target. Any decisions made by the NBP will likely impact the direction of GBP/PLN.

In terms of industry and trade, over 90% of Poland’s economy consists of the industrial and service sectors, with steel and iron production, mining, chemical fertilisers and shipbuilding being the main industries. Poland’s key trading partners are Germany and Russia and popular agricultural exports include fish, potatoes, dairy products, speciality bread and chocolate.

Traders should keep an eye on international demand for Poland’s exports, which will play a major role in the value of the zloty. Poland is less dependent on external trade than some of its EU counterparts, though it still relies on substantial trade with the EU. Therefore, any change in major exports, coal and iron, will also influence the currency.

Furthermore, since Russia is a key trade partner, any volatility there will also affect the value of the zloty, which might include political or social unrest. Also, if Poland does decide to enter the eurozone and adopt the euro, traders should expect volatility in the GBP to PLN exchange rate.

How To Day Trade GBP/PLN

Now that we’ve covered the historical timelines and influencing factors of this dynamic pair, we can now consider the tools and strategies needed to start making forex predictions. The below should provide a solid starting point.

Technical Analysis

Technical analysis plays a large and important role in most comprehensive day trading methods. For exotic pairs like GBP/PLN, many traders will opt for various strategies including trend, breakout or range trading.

You can start by using a wider time-frame on your live daily chart rather than, say, a 5-minute graph, which will eliminate any initial fear of volatility. Trend trading strategies will involve identifying an overall trend and going long or short, depending on whether the market is bullish or bearish.

If you opt for range or breakout trading, utilise the support and resistance levels and supplement your analysis with popular chart patterns, such as descending triangles, wedges or pennants.

Make sure to utilise a good range of technical indicators to map out the historical GBP to PLN exchange rate on your live chart and identify any patterns over time. Most online providers will offer GBP/PLN chart history of at least 10 years, including XE and TradingView.

Fundamental Analysis

As we are trading outside of the eight major currency pairs, there is a greater risk of the price spinning off into another direction, due to a sudden political or economic event. As such, it is more difficult to keep on top of the news for emerging markets.

This highlights the importance of sound forex knowledge and commitment when trading volatile currency pairs. News resources, economic reports and GBP/PLN market sentiment should be your key tools.

You will also need to utilise a range of different outlets to get the information you need, including Yahoo Finance, Bloomberg or Reuters, though national Polish news is also a bonus if you are fluent in the language. Trader forums can also be excellent tools for trading ideas and analysis.

Remember, keeping on top of your fundamental analysis strategy will be vital in supporting your GBP to PLN forecast for 2025 and beyond.

Automated Trading

Automation in forex trading has increased in popularity in recent years, with vast libraries of custom robots and signals readily available on certain platforms. These tools can not only take the time and stress out of daily trading, but they can also cater to a range of strategies and GBP/PLN investing styles.

With that said, any trader thinking about employing algorithmic trading solutions should approach with caution. Many forex scams will claim to offer a fully tested bot and guaranteed profits, particularly targeted at novices.

GBP/PLN Correlation

Some currencies can be correlated with others, whereby the two instruments moving in tandem represent a positive correlation, whilst a move in opposite directions would represent a negative correlation.

For example, EUR/USD is positively correlated with GBP/USD because of the relationship between the euro and the pound. It might be worth looking out for any similar correlations between GBP/PLN and assets relating to the movement of Russian rubles, as the two nations are closely linked.

Risk Management

When dealing with exotic currency pairs like GBP/PLN, it’s best to test out the risky environment within a demo account first. Once you’ve determined a suitable strategy, you can backtest it within the platform to observe how it copes in the environment. You can then trade in demo mode without risking any real money.

Money management tools such as stop-losses and take-profits will also ensure that your account does not drop below or surge above your pre-determined parameters.

GBP/PLN Session Times

Traders should look to trade currency pairs when volatility peaks. As such, the best time to trade GBP/PLN is between 08:00 and 16:00 GMT, when the UK and European market sessions are open. Note that if you choose to trade outside these times, there will likely be higher spreads on GBP/PLN.

Final Word On Trading GBP/PLN

If you decide to start trading the GBP to PLN exchange rate, there are some considerations to be aware of. Firstly, as with any pair involving an emerging and less liquid market, the risks are higher. Whilst the profit potential can be attractive, it can lead to heavy losses if you lack appropriate experience. Keeping on top of economic news and employing robust technical analysis will be key.

Remember, you can always try out a GBP/PLN live chart to analyse historical data and forecast prices within a risk-free demo account. This way, you can witness the dramatic price swings first-hand and get an initial feel for how the market behaves. You can find demo accounts at most good brokers, including Oanda, XTB and IG.

Find out more about forex trading.

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