Pep Guardiola will hold talks with the Manchester City hierarchy on Monday to make a final decision on the club's pursuit of Alexis Sanchez.
Sources have told ESPN FC that the cost of the deal is likely to see City pull out of the race and leave Manchester United free to seal a £35 million transfer for the Arsenal forward.
Sources also say Guardiola is due to speak to chairman Khaldoon al Mubarak, chief executive Ferran Soriano and director of football Txiki Begiristain on Monday in order to discuss the club's next move on Sanchez.
City are refusing to budge on their £20m valuation of the 29-year-old, whose Arsenal's contract expires in June, and are determined not to meet £35m asking price.
However, after suffering their first Premier League defeat of the season at Liverpool on Sunday, efforts will be made to assess the squad's requirements and whether it is necessary to further explore options regarding Sanchez.
Senior figures at City have told ESPN FC that the cost of the Sanchez deal is prohibitive and that Guardiola shares that viewpoint.
United are ready to pay Arsenal's asking price and the agent fees required to sign Sanchez, but before City officially pull the plug, Guardiola will speak to the club's powerbrokers -- chairman Khaldoon will be involved via telephone in a conference call -- in order to discuss every possible avenue.
City now believe that Sanchez is eyeing a move to United and it is expected that they will withdraw from the face and focus on other targets.