Watson, who currently sits in third place in the Blue Square Premier with his Southport side, has emerged as one of the favourites for the vacant post following the departure of Phil Brown earlier this month.
Speaking to the Liverpool Echo however Watson dismissed the reports as 'speculation', "I don't know where it has come from."
"I wasn't on the odds listings before and now all of a sudden I'm 5/2 second favourite. Such speculation comes with the territory."
Watson is a former Lilywhites player, having featured for them in the early 1990s.
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