The pound appreciated against its major counterparts in the European session on Wednesday, as European shares rose on encouraging earnings results and the U.K.'s progress in coronavirus vaccine rollout raised expectations for an economic rebound.

Hopes that U.S. President Joe Biden's $1.9 trillion covid relief package will be passed soon without Republican votes boosted investor sentiment.

Investors continued to price in a faster recovery due to the rapid vaccine rollout than Europe and much of the rest of the world.

Travelers reaching in the UK will face tougher quarantine measures, warranting hotel quarantine for arrivals and getting imprisonment of up to 10 years for violation of the rules. The new rules, aimed to control the new variants of the coronavirus, will come into force on February 15.

Receding expectations for negative interest rates in the near future also supported the currency.

The pound advanced to near a 3-year high of 1.3856 versus the greenback and more than a 1-year high of 145.07 versus the yen, after falling to 1.3803 and 144.37, respectively in prior deals. The next possible resistance for the pound is seen around 1.41 versus the greenback and 147.00 versus the yen.

The pound touched a 5-day high of 0.8751 against the euro, up from a low of 0.8780 set at 2:15 am ET. If the pound continues its rise, 0.86 is possibly seen as its next resistance level.

Final data from Destatis showed that German consumer price inflation turned positive for the first time in seven months in January as the temporary reduction in VAT rates ended in December.

The consumer price index rose 1.0 percent year-on-year after a 0.3 percent fall in December.

The pound reversed from an early low of 1.2311 against the franc, rising to 1.2343. The pound is likely to find resistance around the 1.26 level.

Looking ahead, U.S. wholesale inventories for December and CPI and monthly budget statement for January are scheduled for release in the New York session.