Which 1992 British currency crisis forced the pound sterling out of the ERM?

The 1992 British currency crisis that forced the pound sterling out of the Exchange Rate Mechanism was Black Wednesday.

Black Wednesday occurred on 16 September 1992, when the British government suspended the pound’s participation in the European Exchange Rate Mechanism, or ERM. The ERM required participating currencies to remain within agreed exchange-rate bands against other European currencies.

Speculators, including George Soros, believed the pound was overvalued and that the government could not maintain its ERM commitment. The Bank of England raised interest rates repeatedly and intervened in currency markets, but selling pressure continued. The government ultimately withdrew the pound from the mechanism and later reversed the emergency rate increases.

The episode damaged the governing Conservative Party’s reputation for economic competence. Britain did not join the euro when the single currency was introduced. Black Wednesday is therefore a currency-market crisis rather than a conventional share-price crash, although it remains a major financial-market collapse in modern British history.