George Soros, arguably the most successful speculator of his generation, and his portfolio manager Stanley Druckenmiller played a major role in the trade that led to the collapse of the British pound on Black Wednesday in 1992. Joining the European Exchange Rate Mechanism (ERM) had negative consequences for the British economy, leading to a high exchange rate, economic recession, and difficulty in selling goods abroad. Soros accurately anticipated the trigger event that would cause a collapse in certain currencies and sold borrowed currencies to buy German marks, betting against the pound. Ultimately, the Bank of England was unable to stabilize the currency, and the British government had to let the pound crash out of the ERM. Although Soros was not solely responsible for the outcome, he made a substantial profit from it.
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