The 25-year-old is set to become Wolves' second signing of the summer after the £20.5million capture of Nathan Collins and would give Bruno Lage additional options in the final third of the pitch.
A versatile forward, Guedes can play out wide and more centrally and could help Wolves fill the void left by Raul Jimenez as he recovers from an MCL knee injury.
Some have suggested that Guedes' arrival could mean Morgan Gibbs-White departs to allow Wolves to balance the books, with Nottingham Forest heavily interested and having three offers rejected. Their latest offer, on Friday, was £25million with £10million in add-ons.
The Express & Star understands that Wolves still hope to keep Gibbs-White this summer as Lage sees him as an important part of the squad. However, if Forest continue to push for his signature and increase their bid, he could still leave for a fee in excess of £30million.
Reports have suggested that Valencia are keen to cash in on Guedes to help them register new signings ahead of the new La Liga season, which starts this coming weekend.
Guedes is represented by Gestifute and Jorge Mendes, who have done countless deals with Wolves, and all parties are now working to get the deal finalised.
The forward was left out of the squad for Valencia's friendly win over Atalanta on Saturday and manager Gennaro Gattuso confirmed he is due to depart for the Premier League.
He said: "An English club has formalised an offer (for Guedes) for a lot of money and we have to accept it.
“The club told me they’ve received a huge proposal for Guedes from a Premier League club."
Guedes has 31 senior Portugal caps and made his debut in 2015. He came through at Benfica before moving to Paris Saint-Germain in 2017.
He quickly left for Valencia, initially on-loan and then permanently, and in five years in Spain has made 178 appearances and scored 36 goals.
Last season he scored 11 goals in 36 league games.