It has been widely reported that the former Real Madrid boss is the leading candidate to replace Roberto Mancini at following the Italian's sacking on Monday.
Spanish radio station Cadena Cope had claimed that the Chilean sat down with his current employers on Tuesday evening to agree an exit strategy, which would allow him to abandon his contract, which has two years remaining, without triggering the 4 million euros buyout clause.
But the Andalusians have denied that there is an agreement in place just yet.
Pellegrini is keen to put off talk about his future until the end of the Spanish season on May 31, and has denied that he has already agreed a deal to take over at the Etihad Stadium, despite a meeting between his representative and City director of football Txiki Begiristain in April.
The 59-year-old was seconds away from leading Champions League debutants Malaga to the semifinals this season, the same stage he reached with Villarreal in 2006.
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