The currency is Turkey is the Turkish Lira. So use the currency of the country. Of course, businesses will like Sterling, because they can then govern the exchange rate they give you.
We have found the Banks in Fethiye give the best exchange rate. In Calis there are no Banks, there is an Official Change Office, however, Zumrut Jewellery will give you a better rate than the Exchange Office.
Getting Lira from the cash machine using a British Debit Card may incur charges, so check with your Bank if they do charge. We have a Nationwide Card, they do not charge to draw Sterling,they do charge to draw Lira. Also the ATM's at the top of the Main Street by the Dolphin Roundabout are not recommended, there have been far to many theft incidents there. If you use a card, use it at the Banks in Fethiye, they have armed guards.