GBP/USD surged higher on Friday, gaining 0.77% to 1.2597 as softer U.S. core PCE data reduced market expectations for further Fed rate hikes in 2025. The data helped sterling recover from the November trend low at 1.2475, offering bulls a reprieve after the dovish BoE hold earlier in the week. U.S. Treasury yields fell in response, adding to the dollar’s pullback. While Fed officials remained cautious, their data-dependent rhetoric, coupled with declining U.S. rate expectations, has eased immediate downside pressure on GBP/USD.

Technically, GBP/USD is consolidating above critical support at 1.2475, with the May 10 weekly low at 1.2446 providing additional protection. Immediate resistance lies at 1.2613, Friday’s high, followed by 1.2643, the 50% Fibonacci retracement of the recent 1.2811-1.2475 decline. Beyond this, the 30-day moving average at 1.2672 could cap gains. Failure to clear these resistance levels may leave GBP/USD vulnerable to renewed selling, particularly if year-end liquidity exacerbates moves toward support levels.

As 2024 approaches, GBP/USD price action is likely to be driven by positioning and liquidity rather than fundamentals. Year-end volatility, combined with a cautious Fed and dovish BoE outlook, could keep the pair range-bound between 1.2475 and 1.2672. Traders should watch for any breaks below support or above resistance as potential signals for broader directional moves, though the pair is likely to remain in consolidation in the near term.