GBP traded little changed against most major currencies in the European session on Wednesday, recovering from its early losses, helped by the release of higher-than-expected UK's consumer inflation data, which raised hopes that the Bank of England (BoE) would maintain its rates unchanged in the near-term perspective.

The Office for National Statistics (ONS) reported the UK consumer price index increased 1.8 percent y-o-y in January, following a 1.3 percent yo-y gain in December. Economists had expected a 1.6 percent y-o-y advance. That was the highest reading since July 2019. Housing and utilities (+2 percent y-o-y), transport (+1.8 percent y-o-y), restaurants and hotels (+2.2 percent y-o-y), clothing and footwear (+0.2 percent y-o-y), and miscellaneous goods and services (+2.4 percent y-o-y) made upward contributions to inflation in January, while food and non-alcoholic beverages (+1.4 percent y-o-y) were dragged. Meanwhile, core inflation which excludes energy, food, alcoholic beverages and tobacco, accelerated to 1.6 percent y-o-y in January from 1.4 percent y-o-y in December. Economists had forecast core inflation of 1.5 percent y-o-y.

EUR traded flat against most major counterparts. Market participants received data from Eurostat, which showed that Eurozone construction output declined 3.1 percent m-o-m in December, following a 0.7 percent m-o-m advance in November. In y-o-y terms, the construction output fell 3.7 percent in December after a 1.4 percent increase in the previous month. That was the biggest annual decline since January 2017 and contradicted economists' forecast for a 1.4 percent gain. The decline was driven by a 4.6 percent y-o-y slump in building construction, while civil engineering rose 0.9 percent y-o-y.