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Sterling slips as Carney says BoE cannot nullify Brexit hit

* 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 28 (Reuters) - Sterling slipped to a two-week low on Thursday after the governor of the Bank of England said the central bank could not be expected to nullify the likely damage to the economy from Brexit.

The pound has been under pressure against the dollar since Tuesday, when U.S. Federal Reserve Chair Janet Yellen said the central bank should continue gradual rate hikes and that it would be "imprudent" to wait until consumer price growth had reached the bank's target of 2 percent.

It extended this week's losses on Thursday, dipping to as low as $1.3344, its weakest since Sept. 14, as BoE Governor Mark Carney said Britain's economic prosperity would hinge on the final arrangements for its exit from the European Union, as well as the government's fiscal policies.

Sterling reached a 10-week high against the euro on Wednesday, but it eased back against the single currency as Carney gave his speech, trading down 0.3 percent on the day at 88.01 pence per euro.

Strong UK retail sales numbers on Wednesday bolstered expectations of a BoE rate hike in November - a view that lifted the pound above $1.3650 to its highest since the Brexit vote earlier this month.

"We stay of the view that the BoE is on track with tightening monetary policy as part of the November meeting," wrote Credit Agricole strategists in a note to clients. "This in turn suggests that there is room of rising central bank rate expectations to the benefit of the pound."

Speaking after Carney at the event to celebrate 20 years of the central bank's independence from government, Prime Minister Theresa said the government may need to mitigate the effects on savers of current record-low interest rates.

The pound has lost more than 1 percent against the dollar since Yellen's speech, with the dollar lifted not only by interest rate expectation but also by the revival of the "Trumpflation trade", after U.S. President Donald Trump this week proposed the biggest U.S. tax overhaul in three decades .

But not all analysts buy into the stronger-dollar narrative.

"Odds of a Trump tax bill landing on the President's desk in the next six to 12 months still remain relatively low," said ING currency strategist Viraj Patel.

"We still prefer to view the dollar as being in correction mode rather than the start of a fundamentally-driven move higher," he said. "Buying sterling against the dollar on dips looks attractive." (Editing by Larry King)