The EU's Brexit chief negotiator, Michel Barnier, said a deal for the UK to leave the European Union is possible this week, but there are still tough talks ahead.

Barnier spoke to reporters in Luxembourg on Tuesday before briefing the rest of the 27 member states on the closed-door Brexit negotiations.

He said: "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.

"Obviously any agreement must work for everyone – the whole of the United Kingdom and the whole of the European Union. Let me add also that it is high time to turn good intentions into legal text."

A senior European diplomat told AFP: "It's not done yet, but we're trying. The British want a deal and they have moved on customs and Stormont." The diplomat was referring to UK Prime Minister Boris Johnson's proposed soft border between the Republic of Ireland and Northern Ireland.

The UK is scheduled to leave the EU on 31 October, and Johnson has said the UK will leave on this date with or without a deal. 

However, several European leaders have previously made comments doubting whether the UK will be able to come up with a satisfactory deal by this deadline. French President Emmanuel Macron told Johnson on 6 October that he had a week to propose a deal.

Finland's prime minister, Antti Rinne, told the press on Monday the EU needed more time to discuss a divorce deal, and that it was unlikely to have a suitable deal by the end of this week's EU summit.  

European market shares rose to a two-week high after Bernier made his comments and the British pound rose to a five-month high.