Yesterday's UK interest rate announcement left the British pound hanging. The market needs to monitor the upcoming economic data.

Yesterday, the Bank of England (BoE) decided to raise the UK interest rate by 25 basis points to only 5.25%, triggering an adverse reaction among market participants. GBP/USD briefly slid to a one-month low at 1.2620. It later recovered to the range of around 1.2720 due to the weakening of the US dollar in the New York session, but the movement remains under pressure up to the present time (August 4th).

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Before yesterday's BoE announcement, market expectations were divided between a 25 and 50 basis point interest rate increase. In this context, the market considered a 25 basis point rate hike somewhat dovish.

The pound sterling stumbled briefly due to this perception. However, several experts believe the BoE's statements accompanying the announcement were still considered relatively hawkish.

The BoE raised its projections for the UK's economic growth and inflation for this year. If these projections align with future developments, the BoE will likely raise the interest rate once or twice.

The voting results during yesterday's BoE decision-making also hinted at the prospect of further interest rate hikes in September. Two out of nine members of the Monetary Policy Committee (MPC) supported a 50 basis point rate increase, even though the final decision was for a 25 basis point increase.

Dominic Bunning, Head of European FX Research at HSBC, noted several hawkish elements existed within the voting, statements, and forecasts coming from the BoE. He also mentioned that certain hawkish factors linked to today's (MPC) decision could potentially curtail an excessive decline in the (GBP) currency from this point onward.

At the same time, it's important to note that these hawkish elements are not dominant. They merely alleviate the pressure on Sterling but are not strong enough to drive sustained increases.

Market participants need to monitor upcoming economic data to predict the direction of GBP/USD movement. One such data release is the US Non-farm Payroll report, which can significantly impact all major currency pairs later tonight.