The Telegraph says Nigel Pearson is ready to scrap Powell's loan deal and return him to United next month.
Powell, the £4 million United midfielder, is facing another blow to his faltering career after failing to make an impression at Leicester City.
The 20-year-old has not been named in Pearson's 18-man matchday squad for the past three games and made only two appearances as a substitute since signing on loan in September.
United have the option to recall Powell next month and Pearson is set to cut his losses on the England Under-21 international by agreeing to terminate the season-long deal prematurely.
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