Ah! bash was a red herring and entirely my fault. I had this in
.inputrc, left over from a previous era:

  Meta-#: "\C-v£"

This mapped byte 0xA3 to C-v £, which caused great confusion. Removing
it fixed both £ and ğ (I think the latter was because I'd got bash's
internal state in a muddle).

Back to the drawing board regarding login ...

-- 
non-ascii layout/encoding problems at "login" line
https://bugs.launchpad.net/bugs/273189
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