Black Wednesday was the 1992 European currency crisis that forced Britain to leave the Exchange Rate Mechanism.
On September 16, 1992, the United Kingdom withdrew the pound sterling from the European Exchange Rate Mechanism after failing to keep the currency above its required lower limit. The day became known as Black Wednesday. Britain had raised interest rates and spent billions of pounds supporting sterling, but continued selling pressure made membership untenable.
The crisis reflected tensions between fixed exchange-rate commitments and differing national economic conditions. Germany's reunification-related interest-rate policies placed upward pressure on the deutsche mark, while Britain faced recession and wanted lower rates. Speculators, including George Soros, bet that sterling would be devalued or removed from the system; Soros became associated with a very large profit from the trade.
Black Wednesday was not a stock-market crash in the narrow sense. It was primarily a currency and monetary crisis, but it produced major financial-market losses and became one of the defining market shocks of the decade. Britain later enjoyed lower interest rates after leaving the mechanism.