Black Wednesday was the 1992 crisis that forced Britain to leave the European Exchange Rate Mechanism.
The event occurred on September 16, 1992, when the British government withdrew the pound sterling from the ERM after failing to keep it above its required lower limit. The government had raised interest rates and spent billions of pounds supporting the currency, but speculative pressure continued.
Currency traders, including George Soros, bet that Britain would eventually devalue or abandon the pound’s ERM commitment. After the withdrawal, sterling fell and Britain moved toward a more flexible exchange-rate policy. The episode damaged the governing Conservative Party’s reputation for economic competence.
Black Wednesday was not a conventional share-market crash, but it was a major financial-market shock involving foreign exchange, interest rates, and government policy. Britain’s departure also changed the political debate about joining the future single European currency. The pound did not enter the euro, and the ERM crisis became a lasting reference point in European monetary history.