here is my proposal for desired interior design of you living/sleeping area.
Working on project I've come with two solutions .
First idea is to use existing wall hole and put in there convertible murphy bed with combination of custom made shelves to fulfill the rest of space, and gain additional storage for linen or books . Further would be placed working desk (new or existing) with custom made shelves for desired accessories.
Both first and second solution should contain same rug, coffee table, bar/dinning table with two, or tree bar stools in order to save more space and not overload room. Idea is to mount tv on the wall, there are tv holders which can rotate tv for 45 degrees so it could be useful when watching from Murphy bed.
Sofa I use here is Norsborg by Ikea, but as you wish you can keep your current sofa.
I have made 3D RENDERINGS for this solution, so you could see how it would look like.
The only difference between first and second solution is that the second is without murphy bed, instead of it I'd place working desk in the place where is wall hole, and I would add here custom made shelves for desired library.
Here instead of Norsborg sofa I would suggest "BROOKE" sofa bed which would be easy to use when sleeping.
Solution two would be cheaper than the first one.
Decoration and floor lamps, radiator cover showed on render is optional.
I hope you will like this interior design, It was my pleasure working on your project.