Sky Sports News senior reporter Melissa Reddy provides an update on Trent Alexander-Arnold's future, answering all the key questions.

The saga took another twist on New Year's Eve when Liverpool turned down an approach for Alexander-Arnold from Real Madrid.

There was no formal offer but an approach was made by the Spanish side.

Alexander-Arnold is out of contract at the end of the season and reports in Spain have said the 26-year-old has informed Liverpool he wants to play for Madrid.

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Reddy, who interviewed Alexander-Arnold in December, breaks down what this latest development means...

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What does this latest development tell us about where both clubs and the player stand ahead of the summer?

Melissa says: For Real Madrid, it shows us unequivocally that Alexander-Arnold is their top full-back target for the summer, so much so that they don't want to wait until then and would be willing to pay upwards of £20m to get the right-back in advance of his free agency.

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They wouldn't have made an approach to Liverpool to get him in this window if there wasn't encouragement from the player's end - but it's important to underline here that doesn't mean Alexander-Arnold wants to leave Liverpool this month

He is in the middle of a negotiation, and it benefits him to have Real show their hand, to have Liverpool fight for him, for his boyhood club to know Real's intentions and make him an offer worth considering.

He is in an incredibly strong position in terms of the negotiation.

Liverpool were never going to countenance Alexander-Arnold's exit this month given their league and Champions League ambitions

Liverpool and Alexander-Arnold have been in fantastic form this season

Be braced for an overdrive - especially from the newspapers in Madrid.

Is there any danger that this situation with Trent can destabilise Liverpool's title charge?

Melissa says: Contract situations - especially his with Real set to push in their aggressive, charm-offensive way - is the awkward cloud hanging over an imperious Liverpool, but I don't think it'll knock them off stride because of the professionalism of the players and their relationships with Arne Slot which is very strong - I interviewed Trent two weeks ago and he spelt out how much he enjoys the level of detail Slot provides and the tweaks made to his game.

The ambition to win silverware this season will take precedence for all of them.

We've seen Real Madrid make a move, can you see other clubs making moves this month for Liverpool's other out of contract players, Virgil van Dijk and Mohamed Salah?

Melissa says: We're talking about the world's best player on current form in Mohamed Salah and the best centre-back in Virgil van Dijk so it would be a surprise if no elite side tried to entice them.

But I think they've both made it so clear they want to stay at Anfield, and the market is constricted so the clubs that could ordinarily afford them and allow them to compete at the highest level don't have the financial muscle in the current climate to sell them an alternate to Liverpool.

Both players walk into the starting line-up of every top team, regardless of who is stationed in their position - it is not about their talent, but just the state of market forces.

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