-Carsten Brzeski, ING
Business confidence in the Euro zone's largest economy, Germany, dropped unexpectedly in August amid uncertainty caused by Britain's decision to leave the European Union, official data showed on Thursday. The Ifo Business Climate Index, a closely-followed early indicator of economic developments in the country, fell to 106.2 points in August, compared to the preceding month's 108.3 points, whereas market analysts anticipated a slight acceleration to 108.5 during the reported month. That was the lowest reading since February and the biggest monthly drop since Spring 2012. Analysts say that the economy only begins to show signs of post-Brexit pressure. Furthermore, the sub-index measuring current business conditions slipped to 112.8 in August, following July's 114.7 points, while experts' expectations of economic development within the next six months declined to 100.1 from July's 102.2 points. The Munich-based Ifo institute said business confidence deteriorated in all sectors except construction and services. The survey is based on responses from around 7,000 firms in manufacturing, construction, wholesaling and retailing. Despite disappointing results from Germany's Ifo business climate survey, the Euro traded slightly higher against the British Pound and the US Dollar after the data was released.
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