Bayern Munich may opt against signing Manchester City defender Joao Cancelo permanently this summer, according to a new transfer update.

Is Cancelo having a good season?

The Portuguese defender was arguably one of the best full-backs in the Premier League at one point, performing magnificently for City last season, but his stock has fallen dramatically of late. After his relationship with Pep Guardiola reportedly soured, he joined Bayern on loan during the January transfer window in order to earn more playing time.

The Bundesliga giants have the option of signing Cancelo permanently at the end of the season, with an option to activate a €70m (£61.1m) clause. That being said, he has also struggled to become a key part of Bayern's plans since arriving and has shown his unhappiness at his lack of football in Bavaria.

A key update has now emerged regarding the 28-year-old's next steps at the end of the season, with his future still looking very undecided.

Will Cancelo leave Man City for good?

According to Kicker, Bayern look set to avoid activating the aforementioned clause in Cancelo's contract due to his unimpressive impact at the Allianz Arena to date. It is even claimed that they have become disappointed with his attitude during sessions, which could potentially be something that Guardiola relates to.

There is still time for him to turn things around at Bayern, but with his reputation seemingly suffering both there and City, his future does appear to be cloudy.

Cancelo's drop-off in form really does seem to have come from nowhere, with the Portugal international imperious at one point, being described as "outstanding" by former City hero Paul Dickov in the past. He has gone from being one of the most influential figures at the club to almost a problem player, showing a poor attitude and appearing to be incredulous at not being picked for every game possible.

He is contracted to the Citizens until the summer of 2027, so there is still time for him to possibly mend his relationship with Guardiola. However, the Spaniard isn't one to suffer fools gladly, so if he wants Cancelo gone this summer and Bayern also don't want him, it remains to be seen where will be plying his trade next season.

If he can overcome this slump, improve his mindset and return to his past form, City could still have a gem of a footballer on their hands moving forward.