Prime Minister Theresa May said on Monday it was wrong to say a "hard Brexit" was inevitable, after sterling fell to a 10-week low following comments interpreted as a signal she would prioritize border controls over EU market access.
In her first televised interview of the year on Sunday, May denied that Britain would face a "binary choice" between curbing immigration and having preferential access to the bloc's single market.
But investors viewed the comments as a sign Britain was headed for a hard Brexit, sending sterling down more than 1 percent.
Asked at a public meeting if her comments had been interpreted wrongly, May said: "I'm tempted to say that the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, (that) it is absolutely inevitable there's a hard Brexit.
"I don't accept the terms hard and soft Brexit. What we're doing is going to get an ambitious, good and best possible deal for the United Kingdom in terms of ... trading with and operating within the single European market," she added.
May said she had not said anything new in her Sunday interview.
"I'm ambitious for the sort of relationship we can have with the EU when we leave membership of the EU, but we musn't think of this as sort of leaving the EU and trying to keep bits of membership, what bits of membership will we keep," she said.
"It's a new relationship, we'll be outside the EU, we will have a new relationship but I believe that can be a relationship which has a good trading deal at its heart."
Earlier, her spokeswoman said May was ruling nothing in or out before starting departure talks with the EU.