"We have been clear from the start that we are seeking a relationship that respects our sovereignty and which has a free trade agreement at its core, similar to the one the EU has with Canada," a British source familiar with Brexit negotiations told Reuters on Friday.

The source further noted that the EU is asking that the UK accepts continuity with the EU state aid and fisheries policy and said that it is simply not compatible with the UK's status as a fully independent country.

"The EU needs to realise that what they’re asking for is at odds with what the British people voted for so not something we could accept,” the source concluded.

Market reaction

These comments were largely ignored by the market participants. Pressured by the broad-based USD strength following the upbeat Nonfarm Payrolls report from the US, the GBP/USD pair is down 0.3% on the day at 1.3242.