As we move closer towards the October 31 deadline, the Brexit outcome remains unknown. What we do know however is that we continue to see weakness in the Sterling, today trading at £0.93 reflecting the uncertainty the UK is facing.

But it’s not only the Brexit uncertainty that is bringing down the currency. Sterling skidded again on Friday, hitting its lowest in more than two years, after an unexpected second-quarter contraction in the economy alarmed investors already fretting that Britain is headed for a no-deal Brexit.

The next couple of weeks will be crucial for the UK as British Prime Minister Boris Johnson is set to continue to discuss Brexit with parliament.

If the European Union refuses to renegotiate the terms of Britain's departure, Johnson says he will take the country out without a divorce deal on 31st October. However, not everyone in parliament share his same views. Below are some of the likely scenarios the UK electorate can face in the coming weeks.

Early Election following a no-confidence vote

At the moment there is a small majority in Parliament, against a no-deal Brexit. These same members can collapse Johnson's government by holding a no-confidence vote.

An early election could elect a new government with a strategy to either delay Brexit or revoke the decision to leave the EU.

So can a no-confidence vote stop a no deal Brexit?

The problem is that even if Johnson loses a no-confidence vote, it is within Johnson's power to delay any election until after 31st October, the date on which British law states the country will leave the EU, whether or not an exit deal has been agreed.

Can an alternative government be formed?

If the government loses a confidence vote there is a 14-day period in which a new administration can be formed.

If the majority who voted against Johnson formed an alternative government they could try to extend Britain's EU membership beyond the October deadline.

Could Boris Johnson refuse to resign?

Johnson could argue that he is not obliged to resign and decide to hold out until an election is triggered and then hold that election after 31st October.

Although Queen Elizabeth appoints the prime minister and could technically dismiss him; that would tear up the convention that the monarch does not get involved in politics.

Johnson could argue that an alternative administration formed with the sole purpose of preventing a no-deal Brexit is not a true government. Experts expect a legal challenge if he refuses to resign.

Change of law

The law changes could include requiring Johnson to seek an extension from Brussels, to explicitly rule out ever leaving without a deal, or to hold another referendum.

But the timetable to carry out such a plan is tight - parliament only sits for a limited number of days before Oct. 31 and the government can use its control of proceedings to limit any opportunity for opponents to make a move.

This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.

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