fuel gauge

The sending unit is simply a potentiometer that has voltage going through the resistor to ground.  The float in the tank is connected to the potentiometer via a rod.  When the level is low the Wiper of the pot is connected to the end of the pot near ground.  When the level is high, the wiper is connected to the end near the power input.  The wiper is the variable that is connected to the gauge.  It sounds to me that the float is hanging up when the fuel sloshes around in the tank.  You will probably have to drop the tank and remove the sending unit from the top of the tank, and make sure it moves freely.There was a situation here years ago, a local refinery put WAY too muck sulfur in a large batch of gasoline.  It shipped out and made sending units behave just as yours is acting.  They had to pay to get thousands of vehicles repaired.

N.B Darren, Mr.I probably has the answer, but 2 more pointers. On your dash the temp and fuel gauges aren't fed 12v+ign, it's nearer 8 and stabilised (inst. panel voltage stabiliser) this is to damp out needle fluctuations...obviously this doesn't apply to more modern data driven dashboards.  Second point, ground the sender lead to the gauge, this should give you a full scale deflection and will ascertain if your gauge is working properly, it should be a nice, even sweep.' like an electric analogue clock's second hand.