Black Wednesday was the 1992 currency-market crisis that forced the United Kingdom to withdraw the pound from the European Exchange Rate Mechanism.
On September 16, 1992, the British government tried to keep sterling within its ERM trading band while currency traders sold the pound. The government raised interest rates and announced further measures, but the pressure continued. Britain suspended the pound’s ERM membership later that day, and sterling depreciated.
The episode damaged the credibility of the government’s economic policy and became a major political issue. It also demonstrated the difficulty of maintaining a fixed exchange rate when market expectations, interest-rate conditions, and domestic economic needs point in different directions.
Black Wednesday is often confused with Black Monday, the global stock-market crash of 1987. Black Wednesday was primarily a currency and exchange-rate crisis, not a single-day collapse in a stock index. The ERM was intended to limit exchange-rate movements among participating European currencies before the euro was introduced.