LONDON, June 22 Reuters The euro and sterling fell on Wednesday as investors turned to the safe haven dollar as part of a move away from riskier assets which also saw a stock market rally fizzle out, and after data showed British consumer price inflation hit a new 40year high.

With investors turning nervous again about global growth prospects, the U.S. dollar gained ground on most peers. The yen hit a fresh 24year low as rising U.S. and European bond yields contrasted with low Japanese interest rates.

Sterling was down 0.8 at 1.2198, touching its lowest level in almost a week, after British consumer prices rose to 9.1 last month, the highest rate out of the Group of Seven countries, underlining the severity of the costofliving crunch.

Mike Bell, global market strategist at J.P. Morgan Asset Management, said as real wages in Britain are already being squeezed by higher prices, increasing borrowing costs further could feel like rubbing salt in the wound and elevates the risk of a recession. He, however, expected the Bank of England to keep raising rates in an effort to tackle inflation until clear signs emerge that the labour market is weakening.

The Bank of England is stuck between a rock and a hard place, he said.

Wednesday39;s other main event is the start of U.S. Federal Reserve Chair Jerome Powell39;s twoday testimony to Congress, with investors looking for further clues on whether another 75 basis point rate hike is on the cards at the Fed39;s July meeting….