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(Bloomberg) -- The gains that pushed the franc to the strongest on record against the euro may be far from over as markets reel from the Swiss National Bank’s decision to scrap its currency cap, according to the pair’s top forecaster.

Switzerland’s currency has weakened about 16 percent since surging through parity to a record against the euro yesterday. That decline probably won’t last with the European Central Bank expected to announce a “significant” sovereign bond-buying program next week, according to Robert Rennie, head of currency and commodity strategy at Westpac Banking Corp. in Sydney. The company was the most accurate euro-franc forecaster for 2014, according to Bloomberg rankings.

“At least in the short term, we’ll continue to see weakness in the euro-Swiss cross,” Rennie said in an interview today, without providing a forecast. “It would be a huge simplification to expect all of the positions to have been unwound.”

Switzerland’s central bank unexpectedly abandoned the franc’s three-year-old cap of 1.20 per euro after a policy meeting yesterday, sparking the biggest surge in the currency on record. The franc appreciated to 85.172 centimes per euro yesterday, the strongest since the single currency was introduced 16 years ago, before trading at 1.01567 per euro at 10:01 a.m. today in London.

Rennie said it was too early to have a clear indication of how the franc will perform in the longer term, particularly before the ECB announces the composition of any quantitative- easing program.

‘Remarkable Change’

Banks are scrambling to adjust their forecasts for the franc after being caught off guard by the SNB’s decision to abandon the cap that a senior official described as a pillar of policy only two days before.

HSBC Holdings Plc raised its year-end estimate for the franc to 95 centimes per euro from 1.20 francs, David Bloom, global head of foreign-exchange strategy, said in a briefing in Singapore today, describing the change as “the most remarkable change in forecast in my career.”

BNP Paribas SA said it had changed its prediction for the first quarter to 1.02 from 1.23, according to a note from strategists Phyllis Papadavid and Michael Sneyd dated yesterday.

“I expect it to be very volatile until we get more clarity from the ECB side of things,” said Stan Shamu, a markets strategist in Melbourne at IG Ltd. “Is ‘1’ an equilibrium? That’s a million-dollar question.”

The franc has appreciated 16 percent this year, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro is the second worst, having dropped 3.7 percent.

To contact the reporters on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net; Kevin Buckland in Tokyo at kbuckland1@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Nicholas Reynolds, Tomoko Yamazaki

Bloomberg