George Osborne is likely to rule out a formal currency union with Scotland if it becomes an independent country, government sources have allegedly told the BBC.
The UK Chancellor will set out the coalition's position on a currency union between an independent Scotland and the rest of the UK later this week.
Mr Osborne has previously said the rest of the United Kingdom might be unwilling to let an independent Scotland keep the pound. The BBC said he would go further in a speech by ruling out a currency union altogether.
The Scottish Government has said it wants to retain the pound if there is a 'yes' vote to the referendum on 18 September this year on whether Scotland should be an independent country.
The Secretary of State for Scotland Alistair Carmichael warned last week a currency union with an independent Scotland would be unworkable."Independence means leaving the United Kingdom's monetary union," he told Britain's Parliament.
"The only way for Scotland to be sure of keeping the UK pound as it is now is to stay in the United Kingdom ... No one should vote for an independent Scotland on the basis that they will get to keep the UK pound sterling," he added.
The Prime Minister also said on Tuesday that it "would be difficult to justify a currency union post-independence."
Deputy First Minister of Scotland Nicola Sturgeon accused the government of going from David Cameron's "love bombing" to "bullying and intimidation" on BBC Radio's Good Morning Scotland programme.
She said it was "a bluff" because "if this was to be the position of the Westminster government then it would put them in a position that's at odds with majority public opinion in Scotland [...] and in England."
MPs are due to discuss what currency Scotland would use if voters said 'yes' in Westminster on Wednesday in a debate lead by Shadow business minister Ian Murray.