Well The Sun article above states clearly that he is eligible for England and that Southgate was looking at him.
The Sun is a highly respected publication in the UK with a reputation for unfailing editorial accuracy
From the Argus:
Sanchez told Radio Marca in Spain: "There were rumours about the England squad. I prefer to concentrate on Spain. I don’t want to say much about it.
“At the moment I have only got a Spanish passport although, working in England for more than five years, I can get one here as well.”