Nov. 6 (Bloomberg) -- Investors should bet that the pound will decline against the franc as the Swiss National Bank becomes more willing to allow its currency to appreciate, Citigroup Inc. said.

“Increased SNB flexibility on the Swiss franc is likely over time, given the pick-up in Swiss economic indicators and likelihood for future rises in inflation,” analysts Todd Elmer in New York and London-based Michael Hart wrote in a research note dated yesterday. “The Bank of England is likely to lag in removing accommodation, given more balanced positioning this should undercut the pound.”

Citigroup first made the trade recommendation on Nov. 3, two days before the Bank of England’s Monetary Policy Committee announced yesterday it will expand its asset-purchase program by a less-than-forecast 25 billion pounds ($41 billion) to 200 billion pounds.

“In the wake of the MPC decision, the pair has bounced sharply, taking our trade into negative territory,” the analysts wrote. “We doubt that this rise is sustainable, so we will maintain a short pound-franc position.”

The pound was little changed at 1.6848 francs as of 12:34 p.m. in London.

-Editors: Justin Carrigan, Daniel Tilles

To contact the reporter on this story: Beth Mellor in London at bmellor@bloomberg.net

Last Updated: November 6, 2009 07:41 EST