February 27, 2017 / 4:57 PM / 7 months ago

UBS says Swiss franc could surge on more gains for Le Pen

LONDON, Feb 27 (Reuters) - Switzerland’s franc could rise to levels not seen against the euro since just after it scrapped a ceiling on the currency in 2015 if Marine Le Pen gains further in French presidential election polling, analysts at Swiss financial group UBS said on Monday.

While underlining a base case for the franc to retreat from current levels around 1.0650 per euro to 1.08 francs in three months and 1.12 francs in six months, Thomas Flury and Alessandro Bee said it was possible the Swiss National Bank would be forced to allow the currency to rise sharply.

“Current euro-franc and euro-dollar volatility indicates that the market is concerned about the euro-franc exchange rate and whether the SNB has the conviction to stabilize it near current levels,” they wrote in a note to clients dated Feb. 27.

“The situation could become even more complicated over the coming months should the chances of Mme Marine Le Pen winning the presidential race rise further. There is a risk that the SNB may be forced to allow the euro to drop towards 1.03.” (Reporting by Patrick Graham, editing by Nigel Stephenson)

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