Raheem Sterling will not be leaving Manchester City for Arsenal before the transfer deadline, according to Sky sources.
The City winger had been wanted by the Gunners as a part of a potential deal to take Alexis Sanchez to the Etihad Stadium.
On Wednesday, Arsenal rejected a £50m bid from City for Sanchez, who is entering the final year of his contract at the Emirates and wants to leave the club.
It is understood City remain committed to a cash deal and no sum was mentioned in terms of an improved offer for Sanchez.
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Arsenal denied claims Sanchez had handed in a transfer request on Monday night, but Chilean media T13 reported on Tuesday that the 28-year-old had asked to leave the Chile training camp to "conduct personal business".
The Chilean international team have since confirmed that Sanchez remains part of their squad ahead of upcoming World Cup qualifiers.
Arsene Wenger has reiterated his desire to keep Sanchez throughout the summer and said earlier this month that he hoped the former Barcelona man would extend his contract.