Guardiola guided Barcelona to 14 major trophies during his four-year-stint at the Camp Nou, including three La Liga titles and two Champions Leagues, before leaving the Catalan outfit last summer and handing the reins over to his number two Tito Vilanova.
The 41-year-old is currently enjoying a sabbatical from the game, but the likes of Chelsea, Manchester City and AC Milan are thought to be chasing his signature.
However, Spanish football journalist Balague says German giants Bayern - who, under the tutelage of ex-Real Madrid boss Jupp Heynckes have forged a nine-point lead in this term's Bundesliga - are now the favourites to land the former midfielder and a deal is "90 per cent agreed".
"Pep wants a club now and there are two clubs that can offer him that possibility: Chelsea - a job he hasn't decided to take yet - or Bayern Munich.
"Conversations are very advanced with Bayern, to a point where 90 per cent is agreed; he hasn't signed yet but it is one of the leagues he would like to join at some point and Bayern think they can get their man."
Pako Ayestaran, Rafa Bentiez's assistant at both Valencia and Liverpool, feels Guardiola will have his pick of the top jobs come the summer, but thinks he would work best at a club where he could nurture young talent.
"He has the level to perform at any club as he is able to get the most from young players and bring them confidence," said Ayesteran. "But he has a lot of options!"