The Watford Observer understands that national media reports claiming Slavisa Jokanovic’s contract with the Hornets will not be renewed are incorrect, with the Serbian and the club still in negotiations over a new deal.

The former Chelsea midfielder guided the Golden Boys to promotion to the Premier League this season but his current contract at Vicarage Road expires this summer.

We understand Watford and Jokanovic are still in talks over a new deal but, as we reported earlier this week, the Hornets’ head coach’s wage demands remain the sticking point.

Speculation arose this afternoon that Jokanovic was set to leave Watford after respected Spanish journalist Guillem Balague tweeted: “Strange. Watford not making any more steps to renew Jokanovic. I thought promoting a team would keep him at the job.

“Watford looking in the European market for the next manager.”

Jokanovic, who has also managed in Serbia, Thailand and Spain stated on several occasions towards the end of the season that he would like to remain at Vicarage Road for the Hornets’ Premier League campaign.

The Watford boss has been linked with jobs at Premier League clubs Newcastle United and Sunderland.