The Brazilian had been strongly linked with a move to Arsenal and was reportedly keen on a switch to the Gunners but no agreement was reached between the respective clubs. However, in order to stave off interest of their star man, the club had been discussing a new deal and on Saturday evening, after he scored in Wolves' win against Aston Villa, Fabrizio Romano reported that an agreement had been reached.
Two years ago, Cunha joined Wolves from Atletico Madrid in a loan deal which included a €40m obligation to buy clause. Since then, the Brazilian has developed into the club's best player and top goalscorer. He has scored 11 goals and registered four assists in 23 Premier League games this season.
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WHAT NEXT FOR ARSENAL?
Arsenal appear to be running out of options in the transfer market and may have to rely on their existing players for the firepower needed to catch Liverpool. They will be boosted by the performances of 17-year-old Ethan Nwaneri but face a tough fixture against last season's champions Manchester City at the Emirates.