LONDON (AFP) -- British and EU negotiators on Tuesday scrambled to put together a draft text for a Brexit deal with just two days to go before a key European summit.
Both sides voiced cautious optimism that an outline agreement could be reached this week and the upbeat mood saw the pound rally on currency markets.
And European leaders warned that, while they are keen for a deal, time is tight and they will not let Britain use Northern Ireland as a back door to the single market.
EU negotiator Michel Barnier said a text must be on the table by Wednesday morning if it is to be put before leaders at the EU summit starting Thursday -- in time for a special sitting of the British parliament on Saturday.
If this deadline is missed, talks could always resume next week and a special summit be held just in time for Prime Minister Boris Johnson to fulfil his pledge to lead Britain out on October 31.
But European diplomats said London must go further quickly if a deal is to be done this month, despite Johnson having given ground on customs rules for Northern Ireland.
As he arrived in Luxembourg to brief ministers from the other 27 EU states, Barnier struck a cautiously upbeat note.
"This work has been intense all along the weekend and yesterday because even if the agreement will be difficult -- more and more difficult to be frank -- it's still possible this week," he told reporters.
"Let me add also that it is high time to turn good intentions into legal text."
Emmanuel Macron apparently shares Barnier's guarded optimism. An aide to the French president told reporters there was "positive momentum" behind the talks.
Downing Street said Johnson had called Macron and had a "constructive" and "good discussion".
"We want to make progress towards securing a deal as soon as possible and we want to make progress ahead of the EU council on Thursday," a spokesman said.
But German Chancellor Angela Merkel outlined why EU officials are driving a hard bargain and hoping Britain will commit to a "level playing field" in post-Brexit trade and commerce.
"One thing is clear, Britain will develop into another competitor on the doorstep of Europe," she told industrialists. "And therefore the EU will be challenged to become more competitive and to assume geopolitical responsibility."