There will be no compromise on immigration. The single market will remain closed. The City of London will get no special treatment. No negotiations will start until Article 50 is triggered.

It is becoming increasingly clear that the one option the markets feared most is slowly becoming a reality. Britain will opt for a so-called hard Brexit, in which all formal ties with the European Union will be severed.

The response can be seen in the value of sterling GBPUSD, -0.39% . It has crashed to a 31-year low of just $1.27. It may well go down to $1.20 or even lower as the positions on both sides of the English Channel become ever more intransigent.

But for global investors, that will be a great buying opportunity. British equities, bonds and property will never have been cheaper.

There will be some inevitable short-term turbulence — but it is becoming increasingly clear that the U.K. will do just fine outside the EU. Expect sterling to ratchet down another 10% or more — but then to stage a rapid recovery.

When the U.K. voted to leave the EU back in June, no one, including the leaders of the Brexit campaign, had any idea what that would actually look like. The U.K. could have opted for the softest of soft exits. If it had gone for some version of the “Norway model,” it would have complied with EU law, preserved access to the single market, and continued paying into the central budget in Brussels.

Given that Britain had already opted out of the euro EURGBP, +0.09% , and the Schengen agreement that ensures passport-free movement, probably no one would have really noticed the difference.

Alternatively, it could go for a “hard Brexit,” in which it leaves completely, and has no more involvement with the EU than, say, Canada does. Most people expected it to find a compromise somewhere in the middle, where it struck a deal with the EU that allowed Britain access to the single market in return for compliance with its rules and probably a modest contribution to its budget.

That now seems unlikely. Instead, the U.K. is now crashing towards a hard Brexit — because that is what both sides seem to want.

For the U.K., the evidence since the referendum suggests that leaving the EU is hardly the catastrophe for the economy that most experts, and international institutions such as the International Monetary Fund, had predicted. Growth has remained positive. Inflation is subdued. Employment continues to hit all-time highs. Companies still seem perfectly happy to invest in the U.K. —– the purchase of ARM by Softbank 9984, -2.58% for $32 billion is just one example of that.

Apart from a sharp fall in the value of the pound, the economy has carried on much as before, with some strengths and some weaknesses.

Back to the Future: Pound Hits Three-Decade Low

That has emboldened the British. If the economy had tanked in the immediate aftermath of the vote, and were now in recession, as many forecasts said it would, then it would take a brave government to sever all ties with the EU. Since it seems to be doing fine, there is less incentive to negotiate. Sure, it might suffer a bit in 2019 or 2020. But it looks certain there will be no collapse.

Likewise on the EU side, so far there appears to be no willingness to compromise with the British electorate. EU officials and leaders from France, Germany and elsewhere have repeated the mantra that free of movement of labor is essential for access to the single market. There is no necessary reason for that. Membership of the North American Free Trade Agreement doesn’t give every Mexican the right to live in the United States or vice-versa.

Nor is there any reason why the U.K. shouldn’t have an emergency break, as the country that has by the largest number of EU migrants. But the remaining 27 members are against that, as they are entitled to be. The result? There is no room for a compromise. A hard Brexit is what suits both sides.

There are advantages to that. There won’t be much to negotiate, so the whole process should be over fairly quickly. It might well be wrapped up well before 2019. After all, if the U.K. were to have its own set of immigration rules, and access to the single market, that would have to be haggled out, and might even require a treaty change.

By contrast, if the U.K. just leaves, and trades with the EU as other countries around the world do, there is nothing to discuss apart from the date of departure.

But right now the currency markets don’t like it. Sterling is about as popular as Donald Trump at a feminist conference. The pound slumped on the referendum, and is slumping all over again as the shape of Brexit becomes clear. It has fallen all the way to $1.27, a level last seen all the way back in 1985. It may well go down to $1.10 or even parity. And yet, that surely presents a buying opportunity — at least for the rest of the world. There are two reasons for that.

First, a cheaper pound is part of the adjustment mechanism. Sure, some exporters will suffer from leaving the EU, and will face modest tariffs. But a devaluation will more than make up for that. Net-net, most will come out ahead. So whatever harm is caused by leaving the EU will more than be made up for.

Second, the markets have got Brexit wrong once, and are doing so again. Investors have consistently overestimated what the EU contributes to trade and economic growth more broadly. In fact, it is World Trade Organization rules that are important. There is very little evidence that, with the possible exception of financial markets, the single market makes much difference to the U.K. one way of the other.

We can expect to see sterling under pressure all the way up to the triggering of Article 50 in March next year. For American and Far Eastern investors, Britain will never have been cheaper. But it will also recover very quickly — and anyone who buys in at these bargain levels will do well.