The 1992 pound sterling crisis, when the UK left the European Exchange Rate Mechanism, was nicknamed Black Wednesday.
On 16 September 1992, the British government tried to keep the pound within the ERM’s permitted exchange-rate band. Heavy pressure from currency traders forced the government to raise interest rates and spend foreign-currency reserves. These measures failed, and the UK suspended the pound’s ERM membership later that day.
The episode became a major political embarrassment for Prime Minister John Major’s government. It also demonstrated the difficulty of maintaining a fixed exchange rate when market expectations, domestic economic conditions, and policy commitments pull in different directions. Currency-market losses and uncertainty affected British financial markets.
Black Wednesday is not the same event as the 1987 Black Monday stock-market crash. It centered on the pound and the ERM rather than a single worldwide equity-market plunge. The UK’s exit eventually allowed interest rates to fall, and some economists later argued that the change supported economic recovery.