Sterling falls on sharp GDP drop, UK in recession

* Sterling sinks on bigger-than-expected drop in UK GDP

* Pound falls to new 23-year low vs dlr at $1.3500 GBP=D4

* Pound hits record low against yen GBPJPY=R

* UK Q4 GDP falls 1.5 pct; confirms Britain in recession

LONDON, Jan 23 (Reuters) - Sterling fell broadly on Friday, sinking to a fresh 23-year low against the dollar, as data showed the UK economy shrank at its fastest pace since 1980 and confirmed Britain had fallen into recession for the first time in nearly 20 years.

Sterling had been falling all week as UK banking sector woes hounded share prices and concerns mounted over the British government's ability to service its debt after a new multibillion pound bank rescue plan was announced on Monday.

The pound is now down some 8.5 percent against the dollar on the week, heading for its biggest one-week fall since the pound was booted out of the Exchange Rate Mechanism in 1992.

UK gross domestic product shrank 1.5 percent in the fourth quarter, more than forecasts for a 1.2 percent decline and the largest quarterly drop since the second quarter in 1980.