The Football Association confirmed on Tuesday afternoon they would not be extending Pearce's contract beyond the end of June.
The former Manchester City boss' fate was sealed following the Three Lions' dismal showing at the European Under-21 Championship in Israel when they lost all three group matches - against Italy, Israel and Norway.
Former Middlesbrough boss Southgate was immediately insralled as the odds-on favourite to replace Pearce and by Tuesday night was being offered at 8/15.
He previously worked for the FA as their head of elite development before stepping down last year.
Former England coaches Glenn Hoddle (8/1) and Steve McClaren (33/1) were also in the latest betting, with Michael Appleton, who managed at Portsmouth, Blackpool and Blackburn during the 2012/13 season, the second favourite at 5/1.
Sky Bet's Chris Spicer said: "The decision not to renew Pearce's contract is no surprise to our punters particularly after England's woeful showing in the European Under-21 Championships.
"The writing has been on the wall for a while. His price not to be offered a contract extension was as short as 1/10 after that defeat to Israel and still received plenty of support.
"Gareth Southgate heads the market to replace Pearce but there are lots of other interesting candidates including the likes of Glenn Hoddle and Steve McClaren in the running."
Source: Newcastle United Mad