The British pound has seen a wild day of trading amid reports of progress and obstacles during a last day of Brexit talks between the U.K. and EU.

Negotiating teams from both sides are still locked in discussions with hopes that a deal could be reached before a crucial EU summit later this week.

A deal needs to be reached Wednesday if it stands any chance of being approved by the EU, and then by the U.K. Parliament at the weekend. If a deal is not approved by October 19, U.K. Prime Minister Boris Johnson is legally obliged to ask the EU for an extension to the current departure date of October 31.

On Wednesday afternoon, sterling rose above $1.28 on a report that the main obstacle to a Brexit deal had been removed. It briefly touched a new five-month high of $1.2840 after a reporter for Irish broadcaster RTE, citing European Union sources, said opposition from Northern Ireland's Democratic Unionist Party (DUP) to new Brexit proposals had been overcome. This was later dismissed by the party's leader, however.

The currency and U.K. stocks had fallen earlier in the day on other media reports which suggested that talks had stalled over a future trade deal and fair competition clauses, as well as renewed concerns from the DUP.

Irish Prime Minister Leo Varadkar also confirmed that there were still outstanding issues, particularly surrounding Northern Ireland, that were "yet to be resolved" and that talks may need more time.

"There is a pathway to a possible deal but there are many issues that still need to be fully resolved, particularly around the consent mechanism and also some issues around customs and VAT," Varadkar said in a speech, according to Reuters.

He added that there was the possibility of an additional EU summit before the departure date of October 31 if necessary.