Pep Guardiola says Julian Alvarez "wants a new challenge" as he seemingly confirmed the striker would be leaving Manchester City.

Reports earlier this week said City had agreed a club-record sale for Alvarez to Atletico Madrid, with the Spanish club expected to pay £81.5million.

Alvarez featured in 54 games in all competitions for the Citizens last season, more than any other player, though 15 of those were substitute appearances.

However, while away with Argentina at the Paris Olympics, he voiced his frustration at a lack of playing time in the big games for City, often missing out on a place to Erling Haaland.

Guardiola made it clear after those comments that he was keen to try and keep Alvarez at the club but has now passed his well-wishes to him ahead of his anticipated exit.

"First of all, I want to say my gratitude for Julian. We won everything, his contribution has been massive," Guardiola said ahead of City's Community Shield meeting with Manchester United, via Sam Lee.

"He was incredibly loved by the team for his behaviour but if he wants to leave, a new challenge — Atletico is a top club — then if you want to leave, it's okay. We wish him the best.

"I learned a lot from him, hopefully he can find what he was looking for.

"I don't know the reason why, he said to me, he wants a new challenge, he feels it's what he needs to do. Last season he played a lot, at some moments with Erling, but I understand in certain moments he didn't play.

"I said to the club many times, at the end, the club has the end decision, but I say that contracts can be broken. If you are not happy, why should you be here? He believes his period here must be over, so okay, both clubs arrived at an agreement and that's all."

Alvarez was a useful player for Guardiola, often being utilised as an attacking midfielder as well as a centre-forward.

He scored 19 goals last season, outperforming his 17.5 expected goals (xG) while also contributing 13 assists, a tally bettered only by Kevin De Bruyne (17). Only Phil Foden (107) created more chances than Alvarez (98).

His departure could leave a big gap in the squad, and Guardiola insisted he is not yet sure who they will bring in as his replacement.

"I don't know yet, we talk every day, we'll see what will happen," Guardiola added. "It could happen, it could not happen. We will see."