The United Kingdom was forced to leave the European Exchange Rate Mechanism during the 1992 Black Wednesday crisis.
On September 16, 1992, intense speculation pressured the pound sterling. The British government tried to keep the currency within its permitted ERM band by raising interest rates and spending foreign-exchange reserves, but the measures failed.
The United Kingdom suspended the pound’s ERM membership that day. The episode became known as Black Wednesday and badly damaged the government’s economic credibility. The crisis also involved Italy, whose lira left the ERM around the same period, but Britain’s withdrawal gave the event its best-known political identity.
The ERM was designed to limit exchange-rate fluctuations among participating European currencies and was a precursor to the euro. Britain later rejoined the ERM’s successor arrangements only in the context of broader European monetary developments; it did not adopt the euro.