Sterling briefly soared through the €1.17-barrier against the euro after the comments from Mr Rees-Mogg, with investors interpreting this as Britain coming closer to a Brexit deal.
As of 10:45AM UK time, the pound is €1.1689. At the same time of writing, the pound is trading at $1.3228 versus the US dollar.
Asked if that meant the options were now “deal or potentially no Brexit”, Mr Rees-Mogg said: “That, I think, becomes the choice eventually.
“Whether we are there yet is another matter, but I have always thought that no-deal is better than Mrs May’s deal, but Mrs May’s deal is better than not leaving at all.”
He added that “leaving the European Union, even leaving it inadequately and having work to do afterwards is better than not leaving at all”.
Mrs May’s Brexit strategy was in tatters this week after MPs voted to take control of the process from the hands of ministers and three pro-EU ministers quit the Government. In a fresh blow for the Prime Minister, the Government was defeated by the passing of cross-party amendment by 392 to 302 – a majority of 27.
Business minister Richard Harrington, who resigned along with Middle East minister Alistair Burt and health minister Steve Brine, said the Government was “playing roulette” with peoples’ lives and livelihoods in its handling of Brexit.
MPs will now vote on a range of Brexit options later on Wednesday, giving Parliament a chance to indicate whether it can agree on a deal with closer ties to the European Union.
Ian Strafford-Taylor, CEO of currency expert, FairFX said: “Last night brought a new wave of important votes on Brexit and it’s likely that we’ll see the pound shift again as the week continues.
“Today, the pound stands at 1.16 against the euro, still down 10 percemt against compared to the day of the referendum back in 2016.
“It’s improved compared to the start of the year when it was down 15 percent against the euro, but whether this will still be the case by the end of the week remains to be seen.”
Connor Campbell, analyst at Spreadex, said: “The pound basically opened unchanged against both the dollar and the euro, lurking at $1.319 and €1.1665 respectively as sterling waits for further clarity on what exactly is next for Brexit.
“It may not get that until tomorrow’s indicative votes, meaning, surprises aside, Tuesday could be a quiet one for the currency.”
Meanwhile, ministers warned today that Britain could be on the cusp of another General Election within weeks after Mrs May lost control of Brexit.
Brexit Secretary Stephen Barclay said a third election in four years would be the logical conclusion of the Government losing control over the country’s departure from the European Union.
And his warnings were echoed by fellow ministers Liam Fox, Andrea Leadsom and Alan Cairns who agreed an election was increasingly likely.
A Cabinet insider said: “If we lose control of the process then we are heading for an election.
“We’ll either lose a confidence vote – in which case you could even get Corbyn without an election – or we will be forced to go for an election ourselves.”