The Citizens travel to Paris on Wednesday night, for a game that could have huge significance on their season.
Nicholas, who spent four and a half years at Arsenal, said it will be vital for City to score, but he can't see it happening:
"City need to score if they concede because they can't be trusted to keep a clean sheet at home. They've always got a chance of a goal with Sergio Aguero while David Silva had his best game of the season at the weekend. However, I fear they'll struggle against this PSG side and suffer a defeat which will all but end their Champions League campaign."
City have been on a poor run in the Premier League of late, but their 4-0 win away to Bournemouth on Saturday will surely give them confidence as they head into this crucial encounter.
The return of Kevin De Bruyne seems to have lifted the side, but Nicholas says it's at the other end of the pitch where there is cause for concern:
"I'd expect PSG to dominate the ball and expose their defensive frailties."
Crucially for City, they will be missing their influential skipper - Vincent Kompany through injury, and the former Arsenal man obviously feels this will be one step to far for the Citizens, as he made his prediction for Sky Sports - a 2-0 win for the home side.
The Soccer Saturday pundit also went on to say how he feels Zlatan Ibrahimović is using the Champions League stage to tout his qualities to potential Premier League suitors:
"Zlatan Ibrahimović is a strange and unpredictable man and looks in the mood to prove that he is capable of coming to England and being the king of the Premier League next season."
Key players - Yaya Touré and Joe Hart are likely to miss the trip to Paris along with Kompany, so City will have to rely heavily on David Silva, Kevin De Bruyne and Sergio Agüero if they are to have any chance of progressing.