The 23-year-old - signed permanently from Manchester City for £4.3million last summer after a successful loan at Wolves - will be hoping for increased game time after falling out of favour under Vitor Pereira.
He has made 58 appearances for Wolves across all competitions, but there were only three Premier League starts last season and he did not get on the pitch over the last two-and-a-half months of the campaign.
His one goal last season was a 90th-minute consolation at Brighton & Hove Albion in the Carabao Cup.
Blues were promoted as the record-breaking League One champions last year and are seeking promotion back to the Premier League following heavy American investment in recent years.