Jose Mourinho hopes Manchester United will fend off late interest from Chelsea to sign Alexis Sanchez after Manchester City pulled out of the race for the Arsenal striker in another dramatic twist to the extraordinary transfer saga.

City had been favourites to sign Sanchez but the Premier League leaders chose to walk away after it became apparent a deal would cost more to complete this month than the £60 million fee they agreed with Arsenal last summer before the transfer collapsed on deadline day.

Although Chelsea are thought to have entered the running for Sanchez, United remain the frontrunners and have offered Armenia playmaker Henrikh Mkhitaryan as a makeweight as they seek to match Arsenal’s £35m valuation of the Chilean. United are also prepared to meet Sanchez’s demand for a signing-on fee worth as much as £20m, in addition to footing a bill of up to £10m for the player’s agent, Fernando Felicevich.

That would value the overall deal at £65m for a 29 year-old who is out of contract at the end of the season and does not include the £350,000-a-week wages, including bonuses and image rights, Sanchez is in line to earn and which would make him the highest-paid player in the Premier League.