* Graphic: sterling and gilt yields http://bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
LONDON, Sept 27 (Reuters) - Sterling slipped below $1.34 for the first time in almost two weeks on Wednesday, against a dollar that was lifted across the board by the chair of the Federal Reserve saying more U.S. interest rate rises were needed.
Fed Chair Janet Yellen said on Tuesday that the central bank should continue gradual rate hikes despite broad uncertainty about the path of inflation, saying it would be "imprudent" to wait until consumer price growth had reached the bank's target of 2 percent.
The comments drove a broad rally in the dollar, which hit its highest in five weeks in London trade on Wednesday.
The pound fell as much as 0.7 percent to $1.3364, its weakest since Aug. 14, before edging back up to $1.3397 by 0915 GMT, down half a percent on the day.
Sterling had rallied almost 6 percent against the dollar earlier this month to a 15-month high above $1.3650, on rising expectations the Bank of England will raise interest rates in November. But it has come under pressure this week as predictions of a U.S. hike have prompted investors to cut short dollar bets.
Uncertainty over the direction of Brexit negotiations - which recommenced this week in Brussels - also continues to weigh on the pound, which has fallen more than 10 percent against the dollar since before Britain's June 2016 referendum on European Union membership.
"Most of the sterling recovery over the last two weeks is probably related to a repricing of expectations on BOE policy, which means that the pound still trades with a significant Brexit risk premium," said SEB currency strategist Richard Falkenhall.
"Any sign of progress in Brexit negotiations would probably reduce the risk premium and strengthen the pound. We have revised our forecasts in euro/sterling lower."
Many market watchers remain sceptical about the British economy's ability to stomach an interest rate increase, and traders say hawkish rhetoric from policymakers will have to be matched by underlying improvement in data to radically change expectations.
Data due from the Confederation of British Industry (CBI) at 1000 GMT will be watched by investors. Retail sales growth slowed in August at the fastest pace in more than a year as a squeeze on consumers from rising prices continued.
Against the euro, sterling was flat at 87.63 pence .
"In view of unquantifiable Brexit risks coupled with a slowing economy and burgeoning household debt, it is our contention that... limits (to sterling strength) cannot lie too far above current spot rates," wrote BNY Mellon currency strategists in a note to clients. (Reporting by Jemima Kelly and Saikat Chatterjee; editing by John Stonestreet)