Phelan has replaced Tony Pulis as the favourite to take over at the Riverside Stadium following a surge of support at Sky Bet.
The online bookmaker has reported a run of bets on Phelan taking the Boro job as his first managerial position, having left Old Trafford along with Sir Alex Ferguson at the end of last season.
Phelan was not even considered in Sky Bet's initial market on the position following Tony Mowbray's departure, but he has quickly been backed in from 16/1 on Tuesday night to his current price of 1/3.
Pulis was installed as the initial favourite but has since drifted out from 6/4 to 8/1 to take the post, while Mark Venus, Stuart Pearce (both 20/1), Martin O'Neill and Alex McLeish (both 22/1) are considered alternative options.
Sky Bet' target='_blank' class='instorylink'>Sky Bet Football Trader Chris Spicer said: "We initially pitched Pulis as the favourite in what was a pretty wide-open market but Phelan has attracted the majority of the backing since Tuesday evening.
"Phelan has made it clear that he is interested in making the step into management and has the perfect preparation having worked under the very best at Old Trafford."