A note to anyone who mentions FF7's Summons: that's cheating. This is a one on one fight, and the summons of FF7 are distinct beings that show up when the Summon is cast. Knights of the Round is a group of thirteen knights. If Cloud is allowed to use summons, then Shulk should have his party backing him, and this becomes a huge FF7 vs Xenoblade fight.
Assuming Shulk is not using the endgame Monado 3, I think it's worth looking at their actual fighting styles. Cloud is a heavy hitter, with high Attack and Magic, at the cost of Speed. His Limits are mostly sword skills, and although magic varies based on the equipped materia, we can make some decent guesses what those would be. He is mostly seen using Fire and Lightning Magic in spinoffs and explicitly states that he wants to minimize materia use in Advent Children, so considering how he'd need to take advantage of his magic stat anyway, Cloud would probably enter any given fight as a Slow but Strong Fighter with a couple of powerful Black Mage spells.
Shulk has a very different fighting style, largely tied to his unique weapon and abilities. Compared to Cloud, he seems to sacrifice some Defense for Agility. His Arts, both with and without the Monado, are largely based on his position compared to Cloud and dealing secondary effects, such as Break, Slow, Daze, etc. Cloud can use a Ribbon to prevent some of these, but only at the loss of another acessory.
What I think is most important here is speed. Cloud has strong spells and Limits, but these would be the sorts of things Shulk would be able to forsee and counter in advance. ESPECIALLY since Limits take time to charge and Shulk is the faster of the two. The Monado Arts Shield, Speed, and Armor would all be very useful, ruining Cloud's best moves, with some light healing magic to fill the gaps.
Plus, Cloud's non-magic or ability materia, supporting his stats passively, are countered by Xenoblade's Gems, which do the same thing.
