Consider the experimental setup where an insulated wire is wound around a plastic tray containing a compass needle. This assembly is connected to an electric cell through a switch. Initially, the compass needle points in the north-south direction due to Earth's magnetic field. When the switch is turned to the 'ON' position, an electric current flows through the wire, generating a magnetic field around it.

What is the likely effect on the compass needle when the electric current is turned on, and why does this happen?

1
The needle remains static because the wire's magnetic field does not influence the compass.
2
The needle deflects due to the interaction between the wire's magnetic field and the Earth's magnetic field.
3
The needle vibrates without settling, indicating instability in the magnetic fields.
4
The needle inverts completely, pointing south-north due to the overpowering wire's magnetic field. 

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