I presumed the above guarantee only covered deposits held in Irish Banks in Ireland and therefore the deposits would have to be in euros. Is this the case or does the guarantee extend to sterling deposits held by Irish Banks in the UK?

I believe that most sterling deposits held by Irish banks in the UK would be in the bank's UK subsidiary and so, yes, the deposit would be covered by the UK scheme and not the Irish scheme. Similarly "offshore" accounts on IOM and the Channel Islands would be covered (or not) by the schemes there.

If in doubt, put your money in a UK bank that you know to be solid and reliable rather than one in another country that you probably haven't dealt with before.

Depositing in Euros carries the added risks of currency movements.