Birmingham City’s transfer embargo has been lifted but the Championship club face punishment over breaching spending limits.

Garry Monk, the City manager, will be free to sign players before Thursday’s transfer deadline and has been given permission to complete a deal for Denmark under-21 international Kristian Pedersen.

The Football League is also permitting Birmingham to make five more signings in this transfer window, but they will be restricted to free transfers and low-budget loans.

And Birmingham still face disciplinary action for over-spending while the EFL has admitted it is

“extremely disappointed” the club went ahead with a £2 million deal for Pedersen despite their embargo.