2018.02.2818:50:00UTC+00Sterling Slides, Gilts Rally as PM May Rejects EU Brexit Proposals

The sterling pound continues its decline on Wednesday, with the currency falling to an almost three-week trough after British Prime Minister slammed Brussel's first draft of Brexit proposals.

The currency declined by as much as 1 percent to $1.3772, its lowest level since February 9. Sterling has traded as high as $1.4345 last month. The latest decline brings its loss for the month to almost 3 percent- the biggest since October 2016.

While the pound weakened against all of its Group-of-ten peers, yields on the 10-year UK bonds fell, causing prices of gilts to advance across the curve.

The movement in the UK forex and bond market comes after the release of EU's draft of Brexit treaty that revealed the bloc dismissed several of Britain's demands, potentially complicating the country's exit from the European Union.

In its 129-page withdrawal draft treaty, the EU is seen to ignore UK demands for a longer Brexit transition period and an important compromise the country is seeking on land boundary with Ireland.

The decline comes after Mrs May rebuffed an EU proposal that could keep Northern Ireland under the bloc's rules, stating that no UK prime minister could give a nod to such a plan.

The comments are seen to throw a wrench into the negotiations with Brussels and revived worries over a “hard Brexit” that would see the UK exiting the EU without a deal that would give it and its firms access to the bloc's single market.