The ex-Reds and Magpies manager is not a fan of the Gunners’ title hopes, suggesting they suffer from an "inferiority complex" when facing Manchester City.
Despite being a man down just before half-time against City last weekend, Arsenal managed to hold on for a 2-2 draw.
Speaking on William Hill's new Three Up Front podcast, Souness said: “Arsenal had such an inferiority complex against City.
“They’ll be coming away from that game thinking, ‘Wow, they’re so much better than us, we’ll never win the league’. Even in the first half they weren’t really matching City blow for blow. City are a fabulous team but when you go there, you have to be brave and take them on. Right now, teams are going to the Etihad and they’re beaten before the game has even started.
“I tipped Arsenal to win the league at the start of the season, but I’m doubting myself now. I do think they’re getting better, but they’ve shown an inferiority complex when it comes to City. They were happy to sit back and take whatever came their way at the Etihad, without getting up the pitch and trying to cause a problem. I don’t think that was a great sign.”