Britain's Prime Minister Theresa May delivers a speech on leaving the European Union at Lancaster House in London, January 17, 2017.

Britain's Prime Minister Theresa May outlined plans for a clean break with the European Union that will include the United Kingdom leaving its single market trade arrangements.

Britain will not seek a partial membership of the European Union that leaves it "half in, half out", May said on Tuesday in the clearest expression of the government's intentions in Brexit negotiations with its EU partners since a majority of Britons voted to leave the union on June 23 last year.

In a speech outlining her vision for a "global Britain", she told an audience of diplomats and government colleagues: "We do not seek to hold on to bits of membership as we leave."

Anticipation of a speech expected to signal May's intention to pursue a "hard Brexit" sent the pound plummeting on Monday to a level not generally seen for 30 years.

It recovered before and during the speech on Tuesday in a volatile market.

Sterling's rise was attributed in part to May's shedding of light on her government's strategy after months of uncertainty but also to news of higher-than-expected UK inflation that could spark a rise in interest rates.

May confirmed Britain would leave the single market. To remain, she said, would amount to not leaving the EU.

The Remain camp and elements of UK industry and business had hoped to retain membership of a mechanism that allows unrestricted trade in goods and services within the EU. But it comes at the price of EU-wide free movement for citizens of the 28-member bloc.

Although the one-line referendum question in June did not specify what kind of Brexit was on offer, the vote to leave was interpreted as a widespread rejection of such unrestricted immigration.

Britain's Prime Minister Theresa May smiles as she arrives to deliver a speech on leaving the European Union at Lancaster House in London, January 17, 2017. 

May said she wanted the freest possible trade with Europe that would also give Britain "control of the number of people who come to Britain from Europe".

The prime minister said she sought a "stronger, fairer, more united Kingdom" and "a country that reaches beyond the borders of Europe."

May also said that the UK would withdraw from the jurisdiction of the European Court of Justice, the highest court in matters of European Union law.

The prime minister is due to trigger the EU's Article 50 in March to formally launch a two-year negotiating period.

However, the Supreme Court is widely expected to back a legal challenge that would oblige the government to subject that process to a parliamentary debate during which its Brexit strategy might be challenged.

She promised on Tuesday that both houses of Parliament would have an opportunity to vote on a final Brexit deal before it came into force.

In what appeared to be a gesture to business concerns, May said she aimed for a smooth and orderly change in the relationship between Britain and the EU, with measures gradually phased in as the process progressed.

The government would "seek to avoid a disruptive cliff edge".

Government leaders in the rest of the EU have been at pains to remind May that negotiations are a two-way process and that the UK cannot expect a tailor-made deal that would give it better terms than those enjoyed by its European partners.

May said Britain sought "associate membership" of the European customs union to limit future barriers to Britain trading with the EU. But the UK also wanted an arrangement that allowed it to embark on free trade deals with the rest of the world.

Leaving the customs union would mean Britain would no longer benefit from the EU's free trade deals with other countries. At the moment member states all charge the same import duties to countries outside the union.

May had previously defended her policy of not revealing a Brexit plan in order not to give away her position in forthcoming talks. But she was widely ridiculed by the Remain camp for having limited herself to saying: "Brexit means Brexit."