The Magpies are still in the bottom three, having struggled to find any consistency this season.
The Magpies have won just three times in the Premier League this season, but with one of those wins coming in their most recent game, the former England boss seems convinced that the club have the ability to drag themselves out of the relegation zone, and perhaps look further up.
"I think this team is capable of so much more, that's the frustrating thing. A lot of other teams will feel the same and they won't be thinking of fourth bottom," he said.
"That's not our mindset, we're not thinking of that," he added.
While the side seemed almost doomed following a winless start that continued well into October, their recent form has hinted that the players may still be up for the fight at St James' Park.
In their last seven games in the top flight, Newcastle have picked up all three of their victories, to leave them level on points with the two sides directly above them - who also lie just outside of the relegation zone - Norwich City and Bournemouth, and just two points off champions Chelsea in 14th.
While they have tasted several emphatic defeats this season, their most recent performance, a 2-0 win over Liverpool, was arguably their most accomplished, given the opposition they were up against, and may have provided those on Tyneside with the confidence that a relegation scrap may not prove to be the narrative of their season.