Sterling fell on Thursday morning after the Office for National Statistics revised down the UK's growth in the first quarter to just 0.2 per cent.
The currency had been on a rising path to around $1.2995 in the morning before the 9.30am ONS release, but then fell around a half of a cent to $1.2947 as analysts pushed back their bets on an earlier rate rise from the Bank of England.
City of London analysts had expected the estimated growth rate to be unchanged from the first release last month, when the statistics agency estimated an 0.3 per cent expansion.
Alan Clarke, an economist at Scotiabank, noted that the Bank of England in its May Inflation Report had actually expected GDP growth in the first quarter to be revised up eventually to 0.4 per cent.
The Bank's Monetary Policy Committee voted by seven to one to keep interest rates on hold in May, with Kristin Forbes, who is due to leave the MPC next month, the only supporter of a hike.
Betting against a rate hike
However, the minutes of the meeting did relate that other members of the MPC could vote to increase borrowing costs if inflation or other data, possibly including GDP, surprised on the upside.
"Q1 GDP is likely to deter any aspiring hawks from dissenting and taking Forbes' place as chief hawk after her departure at the end of June," said Mr Clarke.
Sterling is currently trading 13 per cent below its level against the dollar on 23 June last year.
However, it has been rising strongly since the turn of 2017, breaking through the $1.3 barrier earlier this month.
Since the referendum
Some analysts said the currency could still see further upside movements in the near term.
"We continue to think that the pound could creep higher, after the market slashed their short bets on the pound for yet another week last week," said Kathleen Brooks, of City Index Direct.
