Black Wednesday caused the United Kingdom to leave the European Exchange Rate Mechanism in 1992.
On September 16, 1992, the British government struggled to keep the pound within the ERM’s permitted exchange-rate band. Speculators sold sterling, expecting that economic conditions and the government’s interest-rate policy would make the target unsustainable. After emergency rate increases failed to restore confidence, the United Kingdom suspended the pound’s ERM membership.
The episode became known as Black Wednesday and was a major political setback for Prime Minister John Major’s government. It also shaped later British debates about adopting the euro, because critics cited the crisis as evidence of the risks of joining a fixed exchange-rate system.
Black Wednesday was primarily a currency crisis rather than a conventional stock-market crash. It belongs in crash history because the currency shock affected financial markets, interest rates, government credibility, and investor confidence.