The lack of strong evidence of a softer Brexit has kept financial markets calm despite the outcome of the U.K. general election.
The FTSE 100 was hovering around the flatline on Tuesday following reports that the U.K. government was holding secret talks with the Labour party ahead of Brexit negotiations. The conservative government lost its parliamentary majority after a snap election last week, which has reduced its credibility to negotiate with the EU.
"For now it's just speculation, we will need to see concrete evidence that the U.K.'s stance has softened, either from a speech by (PM) May or another prominent minister close to the negotiations," Kallum Pickering, senior U.K. economist at Berenberg, told CNBC on Tuesday.
Michael Gove, the new environment minister, said Tuesday that the government is ready to take a softer Brexit stance to ensure that a deal with the EU passes through parliament. He told the BBC Radio 4 Today's program that the government should "proceed with the maximum possible consensus" and "make sure that Remainers' concerns are part of our conversation".
However, Downing Street denied its Brexit approach would change.