According to numerous reports, Rodgers was contemplating following up a first option clause they had with Birmingham for the youngster after they agreed to let Jordon Ibe join them on loan last season.
However, Birmingham's local newspaper - The Birmingham Mail - have released an article claiming there is no agreement with Liverpool on the youngster and the club are under no pressure to sell.
The report states: ‘it has been speculated that the Blues allowed Liverpool a first option clause, or something similar, on Gray when they loaned in Jordon Ibe last season.
‘And reports have speculated the Reds are going to make a £2million move for the talented teenage winger.
‘But Blues are mystified by the claims and are under no pressure to sell, despite the troubles surrounding parent company Birmingham International Holdings Limited.
‘Spurs and Arsenal are also said to be looking at Gray, 18, who has caught the eye with a string of impressive performances over the past few weeks.’
Gray, a self-confessed boyhood Manchester United fan, has made 10 appearances for the Blues this season, playing both on the wing and through the middle, earning the plaudits for his performances.
He made his debut in October last year, coming on as a late substitution in a 4-0 win over Millwall, and scored his first goal for the club in April against Blackburn Rovers.
Last season, he had a sporadic role at the club and only made six appearances, with all but one coming from the bench.
This season, he has had a much bigger impact and has already made five starts for the Blues, scoring one goal, and could look to build on that fairly soon as he becomes an important player for the managerless club.
Tottenham Hotspur and Arsenal have also been reported with interest in the youngster and could look to beat Liverpool to his signature, but for the time being he will look to continue his development in the West Midlands with Birmingham City.