18 Now the birth of Jesus Christ was as follows: when His mother Mary had been betrothed to Joseph, before they came together she was found to be with child by the Holy Spirit. 19 And Joseph her husband, being a righteous man and not wanting to disgrace her, planned to send her away secretly. 20 But when he had considered this, behold, an angel of the Lord appeared to him in a dream, saying, “ Joseph, son of David, do not be afraid to take Mary as your wife; for the Child who has been conceived in her is of the Holy Spirit. 21 She will bear a Son; and you shall call His name Jesus, for He will save His people from their sins.” 22 Now all this took place to fulfill what was spoken by the Lord through the prophet: 23 “ Behold, the virgin shall be with child and shall bear a Son, and they shall call His name Immanuel,” which translated means, “ God with us.” 24 And Joseph awoke from his sleep and did as the angel of the Lord commanded him, and took Mary as his wife, 25 but kept her a virgin until she gave birth to a Son; and he called His name Jesus.
Scripture’s statement that Joseph "knew [Mary] not until she brought forth her firstborn" would not necessarily mean they did "know" each other after she brought forth Jesus. Until is often used in Scripture as part of an idiomatic expression similar to our own usage in English. I may say to you, "Until we meet again, God bless you." Does that necessarily mean after we meet again, God curse you? By no means. A phrase like this is used to emphasize what is being described before the until is fulfilled. It is not intended to say anything about the future beyond that point. [source]
Are you married? If so, try telling your father-in-law this: "I did not have relations with your daughter until we got engaged." See what he thinks of that. After all, if your father-in-law is as perceptive as you are, there's no way he'll make a spurious assumption about pre-marital relations between the two of you based on such a statement.
It's fun to imagine these kinds of things....This is what it would look like, just for review: In casual conversation with your wife's dad, you mention that you didn't have (relations) with his daughter until you were engaged. After telling him not to read so much into an idiomatic statement and that he should stop being so historically ignorant, tell him your statement had nothing to do with what you guys did after the engagement. See how that flies.