Arsenal have rejected a £30m bid from Everton for midfielder Alex Iwobi, Sky Sports News understands.
The 23-year-old is under contract at the Emirates until 2022 and made 35 Premier League appearances last season, scoring three goals and assisting seven.
However, Sky sources understand Everton are expected to return with an improved offer before the transfer window closes at 5pm on Thursday
Meanwhile, Everton have ended efforts to sign Watford midfielder Abdoulaye Doucoure.
It is understood Everton are now considering alternative targets after their second bid of £36.7m was turned down on Tuesday.
However, one midfielder who is expected to be on the move is James McCarthy after Crystal Palace agreed of a fee of £8.5m with Everton for his services.
Follow Deadline Day on Sky Sports
It's Transfer Deadline Day for the Premier League and Championship on Thursday August 8 and Sky Sports will be bringing you all the latest news on who your club is signing.
Start your day with Deadline Day Breakfast (6am) ahead of a special Good Morning Transfers show (9am), with Deadline Day - The Countdown (4pm) taking you to the 5pm deadline.
The Transfer Show - Deadline Day at 6pm will analyse the big moves before Deadline Day at Ten rounds up all the transfer headlines.
As well as tuning into Sky Sports News, don't miss a thing with our dedicated Transfer Centre blog.