Hammond was addressing parliament in a regular question and answer session while Prime Minister Theresa May set out her strategy for leaving the EU at a separate event.
"We will go forward understanding that we cannot be members of the single market, because of the political red lines around the 'four freedoms' that other European leaders have set, but expressing an ambitious agenda for a comprehensive free trade arrangement with the European Union," Hammond told parliament.
Hammond also said sterling volatility posed a challenge to foreign purchasers of British government bonds.
(Reporting by Andy Bruce, writing by David Milliken)
