Pound Falls as EU Warns Brexit Transition Period Not a Given

© Bloomberg. The Elizabeth Tower, also known as Big Ben, and a portrait of Queen Elizabeth II are seen on a British five pound banknote, in this arranged photograph in London, U.K.

(Bloomberg) — The pound fell and gilts rallied as the European Union’s chief negotiator Michel Barnier said that a Brexit transition period wasn’t a given if disagreements with the U.K. persisted.

Sterling headed for a weekly loss as Barnier struck a downbeat tone following the latest round of Brexit talks, saying that disagreements remained on the role of the European Court of Justice in the deal and that citizens’ rights was a “major issue” for the EU side.

“The pound is pushing lower as the pendulum shifts from a soft to a hard Brexit,” said Neil Jones, head of hedge fund sales at Mizuho Bank Ltd. “Some suggest a soft Brexit is indeed dead, leaving a hard or a very hard option. The pound should continue to trade lower on the crosses.”

The fell 0.6 percent to $1.3830 as of 11:57 a.m. in London. It has declined 2.2 percent this week, headed for its biggest weekly loss since October.

Bonds rallied across the board, with the on U.K. 10-year government bonds slipping four basis points to 1.58 percent.

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