The British currency was on track for the hardest drop in nearly two months as conflicting announcements from the European Union and the United Kingdom sparked jitters that talks between the two sides on a possible agreement will fail.
The pound was down by over 1 percent to lead the losers in the Group of 10 currencies, erasing last week's rally. European Union head of negotiations Michel Barnier disclosed that a "highly ambitious" economic accord is on the table for UK -- but only if it agrees to its conditions.
The EU rules did not sit well with Prime Minister Boris Johnson, who immediately junked the demand and insisted Britain will survive even if the deal collapses.
The British currency's decline highlights a major reversal from the UK's formal exit of the Union late Friday, when the pound wrapped up its best week since December after England's central bank kept its rates intact.
While the British government is now in a transformational stage without revisions in policy, the country could still be on course for an economically troublesome separation if a trade deal is not finalized by end of the year.
The sterling made quite an advance toward the final weeks of 2019 on anticipation that Johnson would come out victorious in December's polls and snaps the UK's political impasse.
The jubilant vibe has since waned and capitalists are now keeping an eye on for whether Britain will work to extend its passage phase before the deadline in June.
The pound was down 1.5 percent to $1.3015, after rallying 1 percent last week. The currency slowed down to 1.1 percent to 84.93 pence per Euro as a good volume from the retreat came prior to Johnson delivering his statement, suggesting investors had already positioned themselves in advance.
While the United Kingdom has abandoned the European Union, it will still function based on current trading systems until the end of 2020.
The EU's trade deal with Canada, on the other hand, eliminates most import taxes on basic products. The EU has a low-level deal with Australia that minimizes some fundamental obstacles on the cost of certifying imports and exports.
Still, worries over Brexit talks are just a figure of the whole equation for Britain's currency traders. The pound's retreat also echoes the fact that the backing it enjoyed in recent sessions is no longer there.
Moreover, the pound's long-term technical trajectory indicated bearish signs while global markets are trading with a "risk-off bias" on doubts about the economic repercussion of Brexit.
