The United Kingdom’s Producer Price Index (Input) fell from 1.1% to 0.8% year-on-year in December. This drop suggests that producers are facing less pressure from rising costs for raw materials and energy. The GBP/USD exchange rate weakened, dropping to around 1.3400 after mixed UK inflation data was released. The UK’s annual Consumer Price Index (CPI) inflation increased to 3.4% in December, up from 3.2% in November. Core CPI also rose by 3.2%, which was expected.

Gold And Cryptocurrency Trends

Gold nearly reached a record high of $4,900, continuing its upward trend despite a small pullback. In contrast, cryptocurrencies such as Bitcoin, Ethereum, and Ripple experienced declines of around 5%, 10%, and 5% respectively over the week. US President Trump proposed potential tariffs on several European countries, with a 10% rate likely starting February 1. Binance Coin (BNB) also fell, reflecting the overall downturn in the cryptocurrency market as retail interest and futures Open Interest sharply decreased. Investing in open markets carries risks, including the possibility of total loss. Individuals are responsible for these risks and the emotional stress that may come with them. FXStreet and the article’s author are not liable for any investment decisions made based on this information. UK producer input prices are down to 0.8%, which suggests that cost pressures for businesses are easing. However, December 2025’s consumer inflation rate remains high at 2.8%, leaving the Bank of England in a tough spot. This difference is creating uncertainty, making options that bet on interest rate volatility, like straddles on SONIA futures, an interesting opportunity.

Trade Policy And Market Sentiment

This situation mirrors last year’s tensions around US trade policy, which resulted in a notable ‘Europe risk premium’. Currently, the focus is on the EU’s Carbon Border Adjustment Mechanism (CBAM) and the White House is expected to address it at Davos next week. Derivative traders should consider EUR/USD put options to protect against a sudden market downturn if tensions rise. The current risk-off sentiment is keeping gold in the spotlight. While gold has pulled back to the $2,550 mark, the memory of last year’s record highs near $4,900 remains a strong motivator for investors. Purchasing long-dated call options on gold futures could be a strategy to prepare for a potential price surge if geopolitical tensions escalate. In the cryptocurrency market, we’re seeing a similar pattern of weakness present throughout much of 2025. Bitcoin is struggling to maintain the $75,000 support level, and futures open interest has decreased by 8% this month, indicating that traders are closing long positions. This suggests potential further declines, making protective put options on BTC a wise strategy for the upcoming weeks. Create your live VT Markets account and start trading now.

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