City are currently the favourites to retain the title they won in record-breaking fashion last season, but Liverpool's summer transfer business has turned heads.
The likes of Alisson, Fabinho, Zherdan Shaqiri and Naby Keita have all rocked up at Melwood in the close-season, leading some neutrals to talk up the chances of last season's beaten Champions League finalists.
Souness appears to share those thoughts, writing in his column for the 'Sunday Times' that: "If their signings work out, if the goalkeeper is a proper one and the new midfielders are workaholics who can handle our football, Liverpool will push City all the way in the two big competitions this season - the Premier League and the Champions League.
"They are the team that City will fear most, unless somebody goes on a late summer spending spree. They must put Pep Guardiola's side under pressure and see if they crack."
Meanwhile, the former Middlesbrough midfielder also took the oppoirtunity to hit out at Manchester United, with various players and staff said to be currently at odds with manager Jodse Mourinho.
"You've only got a chance at a club if everybody from the chairman down is pulling in the right direction," Souness explained.
"Right now, that isn't happening at United. There will be players on the fringes of the team who are unhappy with Jose Mourinho and will be stirring the pot. It's turbulent times for them."