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Using the latest version of SourceTree (18.104.22.168). Just tried to view a text file that uses UTF-16. The first two bytes of the file are FF FE which is the byte order mark (BOM). The source code file views properly with Notepad++.
SourceTree states "No changes in this file have been detected, or it is a binary file ..."
In the Options dialog I changed the default text encoding to utf-16 but there was no change.