The Swiss midfielder is understood to be one of Arsene Wenger's primary transfer targets for Arsenal in the summer with a £34million move mooted.
Monchengladbach have maintained their determination to keep hold of 23-year-old, who has admitted in the past he would like to play in the Premier League.
"I think everybody has a dream," he said.
"Everybody has a childhood dream and that's my childhood dream. If my dream comes true, it remains to be seen. At the moment I cannot say how realistic it is."
A behind the scenes of Citroën and Arsenal’s AirBump Headis
But Wenger's hopes of snapping up Xhaka are in the balance according to German newspaper Express.
And it is claimed Bayern are prepared to activate the clause to add fresh blood to the midfield with Carlo Ancelotti taking over from Pep Guardiola at the Allianz Arena in the summer.
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