In a saucepan over high heat, add vinegar and bring to a boil. Remove from heat and stir in mustard seeds. Cover and let soak for 1 hour.
Transfer the soaked seeds into a food processor or blender and add the cranberries and water. Pulse until everything is chopped, leaving some texture.
Transfer the mixture to a saucepan over medium heat. Bring to a boil, then reduce heat to keep at a light boil and cook for 5 minutes.
Prepare jars and lids. If canning, fill the pot with water, cover, and set it over a burner on high heat to bring to a boil.
To the mustard, add the sugar, mustard powder, and allspice and mix well. Simmer, stirring often, until mustard is reduced by a third and thickened, about 15 minutes.
Divide the mustard among your jars and place on the lids.
If you’re canning, carefully lower them into the boiling water. Place the lid on and boil for 10 minutes. Turn off the heat and remove the lid, letting the jars rest for 5 minutes before removing from the water.
Let jars cool completely before labeling and storing.