Black Wednesday was the 1992 currency-market event that forced Britain to leave the European Exchange Rate Mechanism and caused a major financial shock.
On September 16, 1992, the British government tried to keep the pound sterling within the ERM’s permitted exchange-rate band. Speculators, including George Soros’s Quantum Fund, bet that Britain would be unable to maintain the pound’s value. The government raised interest rates and spent foreign-exchange reserves, but the pressure continued.
Britain suspended the pound’s ERM membership later that day. The episode became known as Black Wednesday, although it was primarily a currency and monetary crisis rather than a conventional equity-market crash. The pound subsequently depreciated, and the government’s failed defense of the exchange-rate target damaged its reputation.
Black Wednesday is often confused with Black Monday, the name associated with the 1987 global stock-market crash. The two events were five years apart and involved different immediate mechanisms: exchange-rate pressure in 1992 versus worldwide equity selling in 1987.