The battered pound may rally about 9 percent against the Swiss franc if Britain votes to remain in the European Union, according to UBS Wealth Management, which manages about $2 trillion.
A vote by Britain to exit the world's largest trading bloc has the potential to move the pound, which has slid 6.9 percent against the franc this year, down by a "decent amount" versus its Swiss peer, which would act as the "ultimate" haven in such a scenario, the Zurich-based wealth manager said.
The pound is trailing behind all its Group-of-10 major counterparts this year amid speculation a June 23 vote to quit the EU would set back the U.K.'s economic recovery, which would then keep the Bank of England from tightening monetary policy. The Federal Reserve started raising rates last year, and traders put the odds of another move before the July policy meeting at 51 percent, from 35 percent at the end of February.
Recommended For You
"In our base case, the result will be the continued membership of the U.K. in the EU, which should lift the exchange rate above 1.50" per franc, UBS Wealth strategists Constantin Bolz and Daniel Trum wrote in a research note. "The swings in the pound/franc will be large before and just after the referendum."
A vote to leave would also hurt the euro as "markets would start questioning the very idea" of the EU, they wrote.
The best hedge against the risk of Britain voting to leave the EU isn't selling the nation's own currency, but buying the franc, HSBC Holdings Plc strategists led by David Bloom wrote in a report this month.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
