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.