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Hey! Unfortunately I only went through Hurghada on a bus, so I can't say for certain. I stayed in Dahab (about three hours Northeast, also on the Red Sea). They take foreign currency and they always have exchange booths, but since most of the prices there were quoted in Egyptian pounds, I found that it was easier (and less likely that you would get ripped off) and more likely that they would be able to make change, if you used the local currency.
As far as Hurghada, I've heard that it is the more touristy place to go, so I doubt that you will have any trouble using Euros or exchanging them when need be. However I would advise you to keep some Egyptian pounds on hand for Baksheesh (tips), as most likely you will be doling it out at least a few times during your stay. They're also handy to have as with my experience in Egypt, the shopkeepers could rarely ever make change (and the biggest bill that I had was 100 Egyptian pounds, or about $20), so for smaller purchases, the local currency will come in handier.
Sorry this is so lengthy, I hope that it's helpful!
Cheers
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