Xboxist.com explains exactly why Microsoft is increasing the price of the Xbox 360 in the UK:
"Has Microsoft just taken a page from Bobby Kotick's book and gone completely insane? No, as it turns out. This substantial increase in price is due to differences in the exchange rate between the British Pound (which has weakened in recent months) and the Euro/dollar which have remained strong. That means that in order to organize shipping, advertising, and retail distribution in the UK, Microsoft needs to charge more in pounds in order to recoup the difference in Euros. Does that make sense? Think of it this way: if you were getting paid in British Pounds for a job in the UK, you would want to get paid more if the currency suddenly dropped compared to your home country, right?"