Either is fine. Sterling is probably easier as you'll only be getting one exchange rate rather than pounds to dollars to Egyptian pounds. Another option is to just take your cash card and draw out money from ATMs as you need it. There are lots of ATMs in Egypt and some UK banks don't charge exchange rates at all.
Take cash in Sterling and change it there - you'll get a better deal than changing it here. Don't bother with traveller's cheques as you'll get a bad deal on them. If you run short use a cash machine - HSBC seem to be the most widespread, and they charge about �1.50 per withdrawal. Also, tak a pocket full of coins with you - �1, 50p and 20p as these are very useful for tips etc.
Also, wash your hands after handling Egyptian notes - they are all extremely old and smelly!