In December, UK housing prices increased by 0.6% compared to the previous year, falling short of the 1.2% forecast. This suggests a slowdown in the housing market. The EUR/USD currency pair dipped, trading below 1.1750, as the US Dollar saw a slight recovery. Meanwhile, GBP/USD remained stable just above 1.3450, struggling for momentum during the holiday trading lull.

Gold and Cryptocurrency Trends

Gold prices rose towards $4,400 after a correction. This increase is likely driven by expectations of a softer Fed policy and ongoing geopolitical tensions. Cardano started the New Year on a positive note, climbing above $0.36, with technical indicators hinting at a possible breakout. The economic outlook for advanced countries looks promising for 2026-2027, thanks to supportive factors from 2025. In contrast, the cryptocurrency market faced volatility in 2025 but gained from favorable regulatory changes and increased interest in Digital Asset Treasuries. Broker recommendations and analyses for 2026 highlight various trading aspects, such as low spreads, high leverage, and customized accounts. It is essential for individuals to do their research, as all trading carries risks. In December 2025, UK housing price data was weaker than anticipated, showing only a 0.6% year-on-year increase, compared to the expected 1.2%. This indicates that the Bank of England’s rate hikes from the previous year are impacting the economy. We may want to use derivatives to prepare for further weakness in the Sterling against the dollar, as GBP/USD has difficulty staying above 1.3450.

Historical Context of Housing Market Dynamics

We witnessed a similar trend in late 2023 when a sharp slowdown in the property market led to significant changes in interest rate expectations. That year, UK house prices dropped by 1.8% year-on-year according to Nationwide, leading markets to anticipate rate cuts for 2024. With this new weak data, we can expect increased speculation that the Bank of England will cut rates sooner than the US Federal Reserve. Gold’s recent strength reflects expectations of a dovish Federal Reserve policy, with markets largely overlooking the US Dollar’s modest short-term recovery. After last year’s economic resilience, many believe that slowing inflation will give the Fed a reason to ease policy in 2026. This sentiment supports buying call options on gold futures, as geopolitical risks continue to be a concern. The Euro is also facing pressure, impacted by disappointing manufacturing data from the Eurozone. Recent Purchasing Managers’ Index (PMI) figures from Germany have been barely above the 50 mark that indicates growth versus contraction. This fragility was evident throughout 2024 and 2025, suggesting the European Central Bank has limited capacity to support the currency. The best opportunities for the upcoming weeks seem to be in the currency markets, focusing on the relative weakness of the British and European economies. We are exploring strategies that benefit from declines in both GBP/USD and EUR/USD. These trades remain appealing even if the Fed adopts a more dovish stance later in the quarter, as economic data from the UK and EU is worsening more rapidly. Create your live VT Markets account and start trading now.

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