Black Wednesday / UK exits the ERM

On September 16, 1992, speculators including George Soros's Quantum Fund bet heavily that the pound sterling could not hold its fixed band within the European Exchange Rate Mechanism. The Bank of England raised interest rates twice in a single day and spent billions of pounds in reserves trying to defend the currency before conceding defeat and withdrawing from the ERM that evening. The Treasury estimated the episode cost billions of pounds, and it badly damaged the Conservative government's reputation for economic competence. Freed from the ERM's constraints, the UK set its own interest rates and, somewhat paradoxically, entered a sustained period of low-inflation growth through the rest of the 1990s.