Per ESPN FC's Peter O'Rourke, the Gunners were "confident" of securing a deal according to "sources close to the player and the Premier League club," while German TV station Sport1 (h/t Stephan Uersfeld of ESPN FC) described his transfer to Arsenal as "imminent."
However, Xhaka told Karsten Kellermann of German outlet RP Online (h/t Uersfeld) on Saturday:
What happens is not entirely down to me. I can only say that I am really happy here, and my contract runs through to 2020. Until today, no offer has been made.
To be honest, I didn't think about it in the past weeks. And I believe you could see that on the pitch. Should something come up, we'd possibly sit down and decide what happens. And if nothing comes up, everything fits here at Borussia.
Gladbach are determined to keep the 23-year-old at the club, and sporting director Max Eberl told Kicker (h/t Uersfeld): "We will fight for Granit. There are clubs who can offer an even bigger chance of playing Champions League and competing for titles and trophies."
The midfielder has emerged as one of the Bundesliga's best holding players in recent seasons, and with the Gunners in need of a player who can add steel to their side—so as to avoid the kind of collapse they've suffered this season and seemingly every year for quite some time—Xhaka could be just the ticket.
According to Squawka, the Switzerland international has won 52 tackles and 87 headed duels this season as well as making 72 interceptions, all while maintaining a passing accuracy of 85 per cent.
Bundesliga expert Clark Whitney ran the rule over his talents:
Journalist Alex Chaffer also believes he's stood out in the German top flight this season, though it's worth noting that DW Sports' Stefan Bienkowski disagreed:
Nevertheless, the midfielder is an excellent player on his way to becoming a real star. Significant investment is needed for Arsenal to challenge for the Premier League next season, and Xhaka would be an excellent candidate to match one of their most pressing needs.
The Gunners' other priority should be more firepower in the final third.
According to Hector Andreu of Spanish outlet Fichajes (h/t Aaron Flanagan of the Mirror), Arsenal will make a "major financial effort" to sign Real Madrid winger Lucas Vazquez, whom manager Arsene Wenger believes is "the perfect player to get the best out of the likes of Olivier Giroud, Mesut Ozil and Alexis Sanchez."
The Spaniard is naturally a back-up to Real's front three, but he has managed four goals and 10 assists during his opportunities to feature this season.
Here are some of his best moments:
According to the Mirror's Ed Malyon, the 24-year-old is "a direct, speedy wideman who loves to whip crosses in but also loves to defend, and whose defensive contribution far outstrips any other attacker in the Madrid squad."
Indeed, per Squawka, he has made 44 successful tackles in La Liga this season as well as 24 interceptions. Real Madrid TV's Phil Kitromilides is an admirer:
While Arsenal primarily need a prolific centre-forward, Vazquez could make an excellent alternative to the likes of Theo Walcott or Danny Welbeck.
Los Blancos' potential transfer ban in 2017 could make them reluctant to part with a useful squad player this summer, but as he's not a key player in the starting XI, it wouldn't be surprising if they let him go for the right price.