Update 5.07pm: Manchester City are prepared to walk away from a deal to sign Arsenal's Alexis Sanchez, it is understood.
The Premier League leaders feel the overall price for signing the Chile forward this month - transfer fee, agent costs and wage demands - is currently too high and must come down.
City are not concerned if this stance opens up a route for another club, even arch-rivals Manchester United, to step in.
Sanchez has long been a target for City and they offered £60m for the 29-year-old, without success, last summer.
They would now hope to do a deal for a fee of around £20m but are understood to have been quoted £35m.
City have been convinced of Sanchez's desire to work with his former Barcelona manager Pep Guardiola again for some time but they were prepared to wait until his contract expires in June.
A knee injury suffered by Gabriel Jesus on New Year's Eve had the potential to change thinking and bring forward a potential deal, but the Brazilian's problem is not as bad as feared.
With assessments suggesting Jesus could be back in training within three weeks, City have no urgent need to bring in another forward this month.
City understand Sanchez is keen to leave the Emirates Stadium in the current transfer window but they will not be pressured into overpaying by the player's representatives, Arsenal or by the interest of any other club.
Reports emerged yesterday that United were keen to enter the race for Sanchez but there has been no confirmation from Old Trafford.
City boss Guardiola refused to discuss the matter at a press conference to preview his side's clash with Liverpool this weekend.
Guardiola said: "I understand completely this question, I understand you are doing your job, but you know my answer.
"I am not going (to speak about it). I'm focused on Liverpool, believe me. Alexis - everyone knows how good he is, but I am not going to answer about Alexis or other players."
Earlier: Manchester City face competition from United for Sanchez signature - reports
Manchester United could rival Manchester City for the signature of Alexis Sanchez this month after reportedly entering the race to sign Arsenal's Chilean forward.
The 29-year-old former Barcelona forward is due to reach the end of his contract at the Emirates Stadium this summer and has been repeatedly linked with a January switch to City.
However, Jose Mourinho's United are said to be keen to snatch Sanchez from under City's noses.
The Premier League title looks set to go to the blue side of Manchester this season, but United could strike a blow should they succeed in taking Sanchez to Old Trafford. Sky Sport Italia reported United are willing to offer a bigger fee and higher wages than City.
Press Association Sport contacted both United and Arsenal, with the Red Devils saying they were not aware of any bid for Sanchez while the Gunners declined to comment.
The United team are due to travel back from a short mid-season break in Dubai on Friday.
Phil Neville, who made almost 400 appearances for United, feels it would send out a big statement should the club pip City to Sanchez's signature.
Neville told Sky Sports' Super 6 Class of '92 Facebook Live: "I think it would be an absolutely unbelievable signing.
"If you look back at Man Utd's big signings over the decades, (Eric) Cantona came out of the hat, (Robin) Van Persie was a surprise, and they both helped United win titles. I think this could have a similar impact. He's got the character to play at Old Trafford.
"It would be a coup, particularly for United fans, to have a player like Sanchez potentially come to them over City. It would be a strong statement.
"It's pretty obvious he's not going to stay at Arsenal. I think if United were going to buy him, £25million would be an absolute snip."
The reports concerning Sanchez further claim that Henrikh Mkhitaryan has been offered as a makeweight in any deal with Arsenal.
Armenia international Mkhitaryan has struggled to hold down a first-team place at Old Trafford this season and Sky Sport Italia reports that Arsenal are keen on the former Borussia Dortmund midfielder.
Arsenal boss Arsene Wenger this week defended Sanchez and insisted the player's omission from his starting line-up for the Carabao Cup semi-final first leg at Chelsea was "nothing to do with the transfer market".