The two clubs entered into negotiations after Arsenal secured the services of Oleksandr Zinchenko for around £32million.
Cucurella is currently valued at £50m, but Manchester City are looking to sign the highly-rated defender for a discounted price.
According to The Athletic, Pep Guardiola's side submitted an opening bid of £30m for the 23-year-old defender.
The Ukrainian is set to join Arsenal from Manchester City after contributing to four Premier League titles.
However, Brighton & Hove Albion rejected their offer as they believe Cucurella is worth at least £50m.
Negotiations over a potential deal will continue throughout the week, but City have made it clear they will walk away if Brighton refuse to budge on their asking price.
The Citizens are willing to increase their opening bid but they are reluctant to pay the full £50m for Cucurella - who featured 38 times for Brighton last season.
However, Brighton are said to be in no rush to sell their star defender and will subsequently hold out for an offer close to their asking price.
Cucurella would be a valuable addition to Guardiola's side - having scored one goal and registered two assists last season.
Additionally, Guardiola has made signing a defender a top priority this summer as he only has one recognised left-back, Joao Cancelo.
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