Manchester City are leading the race for Jude Bellingham after Liverpool backed away from a deal for the England midfielder, sources have told ESPN.

Real Madrid remain interested in Bellingham but City are growing increasingly confident they can land the 19-year-old from Borussia Dortmund.

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City are actively looking to sign at least one midfielder in the summer window because of doubts over the long-term futures of Ilkay Gundogan, whose contract is due to expire in June, and Bernardo Silva.

Bellingham's transfer is likely to cost more than £130 million, although Dortmund have not given up hope of keeping the teenager for one more season.

Bellingham was recently placed No. 1 on ESPN's 39 best male players age 21 or under, having excelled for Dortmund since joining the club in 2020. He increased his stature yet further with a series of impressive showings for England as they reached the quarterfinals of the 2022 World Cup.

According to sources, Liverpool, have decided to cool their interest in Bellingham after choosing instead to use their summer budget to improve the depth of the squad rather than use it to sign one player.

Sources have told ESPN that City's relationship with Dortmund is good after deals to sign Erling Haaland and Manuel Akanji last year.

Dortmund particularly appreciated City's attitude to signing Haaland, which allowed a deal in principle to be announced in early May, well in advance of the transfer window opening.

If City were to complete a deal for Bellingham, they would look to have it wrapped up before Pep Guardiola's team depart for their preseason tour.

Both Haaland, Bellingham's former teammate at Dortmund, and Jack Grealish, Bellingham's England teammate, are both keen for the former Birmingham man to join them at the Etihad Stadium.

Sources have told ESPN that Madrid are still pursuing Bellingham while Manchester United are also interested.

United are also set to renew their interest in Frenkie de Jong if he becomes available from Barcelona, although Erik ten Hag's priority is to sign an established striker.

Madrid representatives have met on several occasions with Bellingham's entourage to convince him that the best option is with the LaLiga giants and have not yet given up hope that he will choose to move to Spain if he leaves Germany.

Madrid are keen on bolstering the midfield amid doubts over the future of Luka Modric and Toni Kroos, who are out of contract at the end of the season.