How does the lord of the castle punish Gawain? How does Gawain react?

The Green Knight explains that he and the lord of the castle are one and the same man, and the two feinted ax strokes represent the first two days of the game, when Gawain faithfully gave everything he won that day to the King. But that third day, Gawain did conceal the sash from the King and as a result is punished by the slight scrape on his neck. Gawain curses his cowardice and covetousness and rejects the green sash which made him guilty.