The Issue was opened in VSCode repo microsoft/vscode#15303 and closed with resolution:

VS Code, on the other hand, doesn't silently fix the incorrect encoding for you, so you actually find out about the encoding mistake in your files and can fix it.

Ex. CoreAdapter.cs

Microsoft.PowerShell.Utility.psd1

Root of the problem is that VS Code default encoding is UTF8 and at the same time, most of the files in the Powershell repo is ASCII. (This problem does not exist in Visual Studio and Notepad++)

VS Code is recommended for the Powershell repo. So we would fix the problem here.