2018.04.2921:41:00UTC+00U.K. Growth Drops to 5-Year Low, BoE Seen Delaying Rate Hike

Britain's economy saw its weakest growth since 2012 in early 2018, with heavy snow only partly to blame, causing investors to sharply reduce their wagers on a Bank of England rate hike in May.

The economy of Britain expanded by only 0.1 percent in the first quarter of 2018, which is below the BoE's expectation of 0.3 percent, official data showed.

Sterling fell sharply against the U.S. dollar, and interest rate futures more than halved the chance of a May rate hike to less than 20 percent.

In year-on-year terms, expansion slowed to 1.2 percent from 1.4 percent, its weakest since the second quarter of 2012 and a rate likely to keep Britain falling behind its international peers.

The slowdown from a modest quarterly growth of 0.4 percent in the fourth quarter of 2017 was propelled by a sharp decline in construction output.

Heavy snow storms in late February and early March, also known as “the Beast from the East” were said to have hurt some businesses before Friday's data. However, the Office for National Statistics said the problems went beyond that.

Two of the BoE's nine policymakers voted to hike rates to 0.75 percent in March, saying the economy was running at close to full capacity - a view largely shared by their colleagues.

Markets now price in just one rate hike for this year, likely by August and almost certainly by November.

Britain's preliminary GDP data - which only has 40 percent of the figures used to calculate the final estimate - precedes most other European numbers.