What happened
Black Wednesday was the product of a political decision: the Major government had joined the ERM at too high a rate (DM 2.95) as a matter of political prestige. Economists warned the rate was unsustainable. The government ignored the warnings, raised interest rates to 15% in a single day to defend the peg, and ultimately was forced to humiliatingly withdraw.
The affair destroyed the Conservative Party's economic credibility, which had been its primary electoral asset. It directly paved the way for Labour's 1997 landslide. However, it should be noted that in the medium term, sterling's devaluation allowed the UK economy to recover — the pain was concentrated and short, unlike what would come later under austerity.