The Portuguese is the main goal of the “green” men after the injury of Kevin de Bruyne.
However, two offers sent by the Premier League champions, with the highest bid of £52 million, were rejected by Wolves.
Coach Pep Guardiola sees Matheus Nunez as a suitable name to replace the current De Bruyne, with the Belgian star due to be out until the end of 2023.
An exclusive source told The Athletic that Nunes pulled out of the episode without explanation to put pressure on the transfer.
Sources close to the 25-year-old midfielder said Nunes wants to join Manchester City and does not want to miss this great opportunity.
Despite this, the Wolves are determined not to sell Nunes until the Nationals have paid the requested sum of around £65m.
According to the Telegraph, Matheus Nunez will have to receive a fine from Wolverhampton Wolves for his disciplinary action if he continues to stay at the Molineux Stadium after the summer transfer window closes.
Currently Nunes still has a 4-year contract with the Wolf Pack, so the club is not under pressure to sell people. The Wolves spent a club-record £38m last summer to bring Nunes back from Sporting Lisbon.