The attacker arrived at Molineux from Spanish giants Valencia, but has struggled to make an impact in the Premier League.
Now Wolves are sanctioning his exit and he is close to completing a loan move to Benfica.
The agreement will see Guedes spend the remainder of the season on loan at Benfica as he looks to rediscover his form and he is due in Lisbon this evening.
Guedes will link up with a side sitting top of the Portuguese top flight and still involved in the Champions League, with a last 16 tie against Club Brugge on the horizon.
The 26-year-old came through the youth set-up at Benfica before being snapped up by French giants Paris Saint-Germain.
Guedes joined Valencia from PSG, initially on loan, before then being signed by Wolves last summer for a substantial £27.5m.
It is unclear if there will be any option in the loan agreement for Benfica to keep hold of Guedes if he shines back in Lisbon.
