Following the arrival of Jurrien Timber from Ajax, it was assumed that the Gunners’ interest in the Portuguese international had cooled.
Sport claim that City will demand “close to” €50m (£43m) for the 29-year-old, who spent the second half of last season out on loan at Bayern Munich.
Barcelona were hoping to sign Cancelo on a temporary basis as well, but City’s demands for a high loan fee mean a deal is not deemed as viable by the La Liga champions.
Arsenal are prioritising other positions
Bringing in another fullback is certainly not top of the agenda for the Gunners, who looking to recruit a right winger or, potentially another midfielder if Thomas Partey leaves.
Over the past week, the London club have been linked with the likes of Ajax’s Mohammed Kudus, Aston Villa’s Douglas Luiz, as well as Crystal Palace’s Michael Olise.
A move for Cancelo could be revisited before the transfer window shuts
After spending over £200m on new signings, the main focus for Arsenal currently is to sell some of the fringe players in the squad.
The likes of Nicolas Pepe, Cedric Soares, Nuno Tavares, Albert Sambi Lokonga, Charlie Patino and potentially Folarin Balogun could all be sold before the end of August.
Money from selling those six stars could then be reinvested in the squad. Even then though, you have to say buying Cancelo may only be on the cards IF Kieran Tierney were to leave as well.
The Scottish international has declared that he is “happy” to remain at the Emirates, but his lack of game time is a cause of frustration and he may be tempted by a transfer if it offers more first-team opportunities.