GBP rose against most of its major counterparts in the European session on Wednesday amid increased hopes that London and Brussels would come to an agreement on their future trade relations prior to Britain's formal exit from the block at the end of the year.

Those hopes have been fueled by recent optimistic media reports about progress in the UK-EU trade talks, positive comments from the UK officials, as well as the announcement that Dominic Cummings, who masterminded the 2016 Brexit referendum vote, will step down as Prime Minister Boris Johnson's top adviser by the end of the year. 

The UK's Business Secretary Alok Sharma said on Wednesday that Britain hoped to get a free trade agreement with the EU, but the block must understand "that the UK is a sovereign nation and that's the basis on which our arrangement with the EU is in the future."

The statement came after Bloomberg reported Tuesday, citing people familiar with trade negotiations, that London and Brussels could strike a deal early next week as the two sides edge closer to the agreement on the biggest sticking points, and the Sun reported that the UK’s chief Brexit negotiator David Frost told PM Boris Johnson there was a “possible landing zone” that could be reached as early as next Tuesday.

Investors also received the UK's consumer price data for October, which showed that the country's inflation accelerated more-than-expected to a three-month high last month. The Office for National Statistics (ONS) reported that the UK's consumer price index (CPI) rose 0.7% y/y in October, following a 0.5% y/y advance in September. This was the highest reading in three months, but well below the Bank of England's (BoE) target of 2 percent. Economists had forecast the CPI to increase 0.6% y/y in October.