The pound struggled for direction on Wednesday (3 May), swinging between losses and gains amid reports the so-called "Brexit bill" could end up costing Britain around €100m (£84m).

Having fluctuated throughout the session, by mid-afternoon sterling traded largely unchanged from the previous day's closing levels against the euro at €1.1832 but was 0.13% lower against the dollar, exchanging hands at $1.2918.

More market reports

The pound's swings were largely attributed to a report by the Financial Times, which hinted Brussels could slap a hefty price tag on Britain's Brexit bill by demanding an upfront gross payment of up to €100bn.

The amount is almost double that of the initial €60bn charge mentioned by Jean-Claude Juncker, the European Commission president, and represents a tough opening gambit as the UK enters Brexit negotiations.

However, Brexit Secretary David Davis rejected the report, saying he did not "recognise" the figure apparently put forward by France and Germany.

"The numbers that have been bandied around in the press – €50bn, €60bn, €100bn – we don't recognise," he said.

"What we have said throughout is that we will meet our international negotiations and we will go into the negotiations in the best interest of both us and the European Union."

However, with Theresa May vowing to be a "bloody difficult woman" in the upcoming negotiations and the EU seemingly play hardball, the pound could face a rocky road ahead.

"Sterling could find itself exposed to downside shocks amid the uncertainty, with recent reports of the EU warning that May could be barred from the negotiations terms, fueling hard Brexit fears," said FXTM research analyst Lukman Otunuga.

"The pound/dollar rate could come under renewed selling pressure if bears are able to break below $1.2875, [which] may encourage a further decline towards $1.2775. In an alternative scenario, an intra-day breakout above $1.2940 could pave the way to $1.3000."

Elsewhere, the dollar was largely on the front foot as investors awaited the conclusion of a two-day Federal Reserve meeting, which is highly unlikely to deliver any surprises. The markets have already priced out a rate hike later evening, but one remains firmly on the cards for next month.

Kathleen Brooks, research director at City Index said: "Although we don't expect the Fed to make any big announcements today [on] when it will shrink its balance sheet or its future move on interest rates, its overall economic assessment will be worth noting."

The greenback rose 0.37% against the yen to ¥112.40 and gained 0.17% and 1.02% against its Canadian and Australian counterparts respectively, fetching CAD$1.3732 and AUD$1.3394.

The dollar was also 0.18% higher against the euro, trading at 0.9161 euro cents, but slid 0.20% against the Swiss franc to CHF0.9896.

Meanwhile, the US private-sector employment slowed down in April as employers added 177,000 jobs, according to consultancy firm ADP. The figure was higher than the 175,000 forecast but lower than a revised 255,000 jobs created in March, although analysts expect Friday's non-farm payrolls report to show the labour market in the US remains in good health.

"We are sticking to our view that Friday's official number will rebound, with a 250,000 print," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"We see little evidence to suggest that the underlying strength of labor demand has changed significantly in recent months."