Rangers agree deal to sign Celtic target, Hoops set to sign former Brighton midfielder
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According to Sky Sports the Reds have given the green light to plans to sell the centre back to Rangers for £4m.
Liverpool signed Davies during their injury-riddled 2020/21 campaign, but he has not made a single appearance for the Merseyside club and spent last season out on loan at Sheffield United.
It is understood that Davies has been linked with Middlesbrough, Blackburn Rovers and also Celtic.
It comes as promising Rangers defender Calvin Bassey closes in on a move to Dutch giants Ajax, for a fee that could rise to £22.9m.
It would be a club record fee for Rangers.
Meanwhile, Celtic are set to add to their midfield options with the arrival of Australian star Aaron Mooy.
Football transfer guru Fabrizio Romano reported on Twitter that the Hoops are set to bring in the former Huddersfield Town and Brighton and Hove Albion midfielder in on a free.
The 31-year-old is a free agent, following his departure from his previous club, Shanghai Port.
It is understood he will sign a contract running until 2023.