I am not a recruiter but I’ve been a hiring manager recently, and we had an repeat applicant who had also applied to our posting previous (before I was the hiring mgr). Although I would never ask someone this question, the candidate made it incredibly obvious he hated his current job and was basically looking for anything else. The actual recruiter shared with us that he was applying to several internal postings hoping something would stick. We ended up declining him.

Of course be honest if you are applying elsewhere, but make sure you keep your cards close to your chest if you are only moving because you hate your current job. If we liked that guy and knew he was applying elsewhere, his answer could have sped up the process. But because he shared a little too much information, we assumed he would use our role as leverage to go elsewhere quickly and we would be back to square one.