Mikel Arteta has been Pep Guardiola's assistant at Manchester City since 2016

Mikel Arteta is edging closer to becoming Arsenal's head coach, with Manchester City's compensation demands continuing to be negotiated.

It is understood there is a broad agreement in place between the two clubs, with City looking to recoup £2m for their assistant manager.

Speaking at his press conference on Friday afternoon, City boss Pep Guardiola said: "He's in London and I think he's close to finishing a deal with Arsenal.

"It's almost done, yesterday he didn't do training, today he didn't do training, he's moving to Arsenal. I don't know the last details of the contract, but it's there.

"When you have a dream, you cannot stop it. Arsenal was an important part of Mikel's career. One of the best teams in England. We wish him all the best. I am pretty sure he will do an excellent job."

Despite three weeks of speculation linking Arteta with a move to north London, no discussions took place between the two parties when City played at the Emirates last Sunday.

However, Arsenal managing director Vinai Venkatesham and club lawyer Huss Fahmy were photographed leaving Arteta's Manchester home in the early hours of Monday morning after a meeting lasting over two hours.

0:52 Guardiola says he's had 'enough' questions regarding Arteta's future Guardiola says he's had 'enough' questions regarding Arteta's future

City are resigned to losing Arteta and will not stand in his way, but are expected to be less than flexible when it comes to both the amount of compensation and the payment schedules agreed with Arsenal.

The Gunners fuelled speculation Arteta's appointment could be imminent on Thursday after postponing interim boss Freddie Ljungberg's news conference to Friday.

Ljungberg was set to face the media ahead of Saturday's trip to Everton - by which time Arsenal hope to have former club captain Arteta in place.

Freddie Ljungberg has urged Arsenal to make an appointment

However, the club have moved the news conference to Friday, giving no information about who will face the media.

Arteta, who played for Arsenal from 2011 to 2016, reportedly said his farewells to staff at City on Thursday morning.

Sky in Italy are reporting Arteta has told City's board he wants to leave to become the Gunners' head coach, but he did travel with his current employers to Oxford for Wednesday's Carabao Cup quarter-final to be on the bench alongside Guardiola.

Ljungberg has been in temporary charge of the Gunners since Spaniard Unai Emery was sacked on November 29.

The Swede has overseen just one victory in his five matches in charge.

Arsenal are seven points adrift of fourth-placed Chelsea and the same number clear of the relegation zone following Sunday's 3-0 home defeat to Arteta's current club.