In December, the S&P Global Manufacturing PMI in the United Kingdom was 50.6, which was lower than the expected 51.2. This indicates weaker performance in the manufacturing sector than anticipated. Economic analysis shows that the EUR/USD is moving towards 1.1700, influenced by a slight recovery in the US Dollar. The GBP/USD is holding steady around 1.3450 but is struggling to make significant gains due to the lingering holiday atmosphere among traders.

Gold Price Movement

Gold prices have risen towards $4,400 after recent declines. This rise is driven by expectations of a more dovish Federal Reserve policy and ongoing geopolitical risks. At the same time, Cardano has gained traction, trading above $0.36 in early 2026, thanks to positive market sentiment. Looking forward, advanced economies are expected to remain resilient and enter 2026 with optimism. However, the crypto market faced volatility in 2025, influenced by regulatory changes in the US and the rise of AI technology. Investing in open markets carries significant risks, including possible losses. The market information presented here is meant to offer insight and shouldn’t be seen as financial advice. All investment decisions should come after thorough personal research. The UK’s manufacturing PMI for December was below expectations, reported at 50.6 versus the expected 51.2. While this still shows slight growth, the slowdown indicates the British economy may be losing momentum as we move into the new year. This disappointing news puts downward pressure on the Pound, which has already fallen below 1.3450 against the dollar.

UK Inflation Concerns

This economic cooling is concerning since UK inflation was still above the Bank of England’s 2% target at the end of 2025, mirroring the 3.9% rate seen in December 2023. The mix of slowing growth and persistent prices makes it tough for the central bank to take action, making strategies to protect against further Pound weakness appealing. Thus, buying puts on GBP futures or shorting the currency against stronger pairs may be worth considering. At the same time, Gold is continuing its recovery towards $4,400, building on its strong performance throughout 2025. This surge is supported by increasing expectations that the US Federal Reserve will adopt a more dovish stance in 2026. As US inflation signs of cooling emerged in the latter half of last year, the market now anticipates rate cuts, enhancing the attractiveness of holding non-yielding assets like gold. It’s important to note that market liquidity is still low following the New Year holiday, which can exaggerate price changes. As more traders return in the coming weeks, we’ll likely get clearer trends, but the initial direction seems to favor long positions in gold and short positions in sterling. It’s wise to keep position sizes small until trading volumes normalize. Create your live VT Markets account and start trading now.

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