Poland's Central Statistical Office (GUS) gave guidance that we should expect Q3 GDP to have increased by just under 3.1%, about similar to Q2.

But the forecasts for Q3 GDP were marginally lowered after IP and retail sales failed to build on August gains.

We ourselves assume 3% increase for Q3, and see risk of downside to our forecast based on recent industrial output readings. The Stats Office guidance makes it unlikely that the government's current forecast of 3.4% growth for 2016 can be achieved -- our own forecast is for 3.1% growth.

Sub-3% GDP growth in H2’16 would disappoint the MPC, but the bar for a return to monetary easing remains high, in our view.

The NBP governor has acknowledged that 2016 GDP growth was unlikely to reach 3.5% as previously expected but sounded comfortable with the 3.1%-3.3% pace consistent with the latest NBP staff projection and close to the economy’s potential growth rate.

As growth slows below 3%oya, we think the NBP would be inclined to pay even more attention to the composition of growth and is unlikely to react unless the outlook for consumer spending deteriorates and/or the investment decline intensifies.

Consequently, we foresee restrained upside potential in EURPLN as the upswings returning to 4.35 levels in coming months.

As we call for upswings but confined at 4.35, short 3m (1%) OTM call EURPLN vs. Buy 1Y 25D EURUSD call.