Pound Falls As EC's Juncker Warns Of Tougher Second Phase Of Brexit Talks

The pound declined against its major counterparts in the European session on Friday, after the European Commission President Jean-Claude Juncker warned of tougher talks in second phase of Brexit negotiations than the first, as the discussions moved to the next stage.

Juncker was speaking at the EU summit in Brussels, where the EU 27 leaders formally authorized the talks to move on to the second phase.

"I have extraordinary faith in the British Prime Minister. She has agreed with me and Mr Barnier that the withdrawal agreement will first be formalised and will be voted on and then we will see. The second phase will be significantly harder than the first and the first was very difficult," Juncker told.

The second phase of talks will be dominated by discussions on a transition period as well as the terms of the future trading relationship after March 2019, when the U.K. leaves the EU.

The U.K. PM Theresa May has been granted three months to reach an agreement on the government's perception of a future trade deal with her cabinet, in order to enable the start of substantive talks on the future relationship.

The German Chancellor Angela Merkel said that the decision to move on to phase two is "quite significant progress," but that is an even tougher piece of negotiation than the first.

The pound held steady against its major rivals in the Asian session, with the exception of the greenback.

The pound dropped to a 2-day low of 1.3319 against the greenback and more than a 2-week low of 149.41 against the yen, from its early highs of 1.3447 and 151.02, respectively. Continuation of the pound's downtrend may see it challenging support around 1.32 against the greenback and 148.00 against the yen.

The pound weakened to a 2-day low of 1.3174 versus the Swiss franc and 10-day low of 0.8860 against the euro, off its early high of 1.3290 and a weekly high of 0.8760, respectively. If the pound slides further, it may find support around 1.31 against the franc and 0.90 against the euro.