Sinclair was linked with a move to Watford back in January.
Sinclair was persistently linked with a move to the Hornets back in January, but that move didn't take place with Watford reportedly prepared to offer £3 million for the teenager.
The 19-year-old's first team opportunities have been limited with the Reds, having made just the one start since Jurgen Klopp arrived at the club in an FA Cup third round tie against Exeter City - where Sinclair scored Liverpool's first equalising goal in a 2-2 draw in January, and featured as a late substitute in a 0-0 draw with West Ham United in the following round.
He was the youngest player to play for the Reds when he was 16 years and six days in a 2-1 win over West Bromwich Albion in the League Cup third round back on 2012. Last season he managed to feature in two Premier League games a substitute but hasn't been able to kick on during this campaign.
Given the competition for forwards at the club - with Daniel Sturridge, Roberto Firmino, Divock Origi and Christian Benteke all ahead of him in the pecking order, and Danny Ings to come back from injury, it looks as if his options would have been limited again prior to Jurgen Klopp's first summer transfer window.
Watford have an established strike partnership of Troy Deeney and Odion Ighalo, who Sinclair will likely challenge for a place in the side.
Given the young forward's age, Liverpool are due compensation - and given that a fee wasn't agreed in January one wonders whether one can be struck without heading to a tribunal this time around.