Sterling / the pound sterling commonly known as the pound (GBP), is the currency used in Gibraltar. UK Coins and Bank of England issued notes are accepted, and circulate in Gibraltar along with with locally issued notes and coins of the same value in pounds and pence. Be aware however that notes that are issued in Northern Ireland and Scotland are not usually accepted in Gibraltar. Just so that we have not confused you, Gibraltar do issue 'local' notes and coins, however these are not usually accepted back in the UK.
Some businesses will accept euros, although keep your eye on the exchange rates, because these may not always be what you would expect. Shops and businesses will usually issue change in GBP / sterling. All major credit cards and UK debit cards are usually accepted in Gibraltar.