(Bloomberg) -- Watch the Swiss franc if you want to gauge the risk of Britain leaving the European Union.

That’s the recommendation of David Bloom, head of global currency strategy at HSBC Holdings Plc, Britain’s largest bank, even though “that might sound a bit nutty.”

The franc, traditionally sought by investors in times of market stress, may rally if the U.K. votes to quit the bloc. While the Swiss National Bank has repeatedly threatened to intervene to stem an ascending franc, a jump fueled by Brexit might be tough to contain, he said. The franc has weakened 2.7 percent versus sterling in the past month.

“If the U.K. does decide to leave, then does the Swiss franc suddenly become a safe haven in Europe?” London-based Bloom said in an interview on Bloomberg Television’s “On the Move” with Guy Johnson. “Suddenly you’ve introduced new turmoil into the whole European political and financial structure” that may see the franc surge and “there is nothing the SNB can do about it.”

ECB Call

Bloom rightly predicted the euro would rebound after the ECB’s Dec. 3 meeting, and sees the currency ending 2016 at $1.20.

The pound was little changed at $1.4662 as of 12:22 p.m. London time on Friday, still on course for its second week of gains. On the year it has lost about 0.5 percent, after paring a decline of about 6 percent in February.

Sterling was little changed at 76.24 pence per euro. It touched 75.65 pence on Wednesday, its strongest since Feb 3.

The Swiss franc was little changed at 1.1073 to the euro. It was on course for a 0.4 percent advance this week after declining 0.8 percent last week.

To read how currency managers are combating Brexit risks, click here.

With the crucial EU vote less than a month away, Luca Simoncelli, a London-based money manager at Unigestion, is looking beyond the U.K.’s borders at the euro and the Swiss franc to hedge against market swings once the referendum outcome is known.

Pound, Polls

The pound is on course to advance against all of its 16 major peers this week as polls signal the “remain” camp is pulling ahead. Yet, investors show no complacency: Sterling-dollar volatility rose to a six-year high Friday. Options to shield against a plunge by the pound on Brexit, compared with hedging against an increase, were at their most expensive in records going back to 2003.

“Anyone who is sensible” is buying protection against violent currency swings, HSBC’s Bloom said.

To contact the reporter on this story: Anooja Debnath in London at To contact the editors responsible for this story: David Goodman at, Todd White, Keith Jenkins

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