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Liverpool and Arsenal have turned their attentions to Isco after Juventus emerged as favourites to sign Pedro. The two Premier League clubs are monitoring Isco's situation at Real Madrid.
Liverpool winger Suso has already agreed personal terms with AC Milan and will either move to San Siro in January or when his Reds contract expires at the end of the season.
Arsenal can breathe a sigh of relief after the injury Jack Wilshere picked up in Dortmund proved not to be serious. The England midfielder will return to training before the end of the week and could feature in Saturday's clash with Aston Villa.
Real Madrid defender Rafael Varane, 21, is reported to have extended his contract with Real Madrid until 2020.
Chelsea and Liverpool have sent scouts to watch Julian Brandt in action for Bayer Leverkusen and manager Brendan Rodgers has also been to Germany to watch the starlet.
Arsenal are considering signing free agents Joseph Yobo or Diego Lugano as they seek defensive cover for Per Mertesacker and Laurent Koscielny.
Ole Gunnar Solskjaer is set to leave Cardiff after discussions with the club over his future. The club are currently 17th in the Championship but owner Vincent Tan wants the club to quickly return to the Premier League.
Arsenal are set to make a move for Lassana Diarra who is a free agent after leaving Lokomotiv Moscow. Arsene Wenger is keen to improve his midfield following his side's poor showing against Borussia Dortmund.
Juventus have joined the race for Barcelona winger Pedro, putting Liverpool and Arsenal's pursuit of the 27-year-old into doubt. The Premier League duo were confident of snapping up Pedro in January but now face serious competition.
Arsenal are poised to sign Real Madrid goalkeeper Iker Casillas with the 33-year-old ready to leave the Santiago Bernabeu for pastures new.