I think City are interested which explains the press speculation.
I don't think they have made a bid but maybe have lodged an expression of interest.
I can't see Sanchez being let go unless we sign a Mbappe and Lemar/Mahrez.
Put yourself in Wenger's position, because of the need to fund the new stadium we experienced 10 years of austerity having to sell players we'd ideally liked to have kept. I'd say in those circumstances qualifying every year for 20 years for the CL was some achievement. We are no longer in that financial position. Wenger knows all too well the frustrations of the fans. He has signed a 2 year extension. I believe it will be his last contract at Arsenal (he will be 70 by then). He will want to go out having done everything to win the Title. I think Kroenke respects him enough to let him have a completely free hand over transfers. If he cannot get the marquee signings I mentioned above, Sanchez will stay regardless of losing him in 12 months and for no value. Challenging for the Title is more important than losing £50m (actually £42m when you deduct the pay rise he's been offered).
That's my analysis. Only time will tell if I'm suffering from the same fault of confirmation bias as the rest of you but there you have it.