Bad move from Apple; they should have eaten the currency swing. The pound is still quite uncertain, but Apple are well hedged. Despite Brexit (which is years away), they are one of the world's largest economies, very tech savvy and extremely consumer-oriented.
The UK is by far Apple's strongest market in Europe, and perhaps the only one where they're increasing market share YOY. They have about 45% of the UK market, compared to ~20% in France/Germany, ~15% in Italy and ~10% in Spain. A weak iPhone at a significantly higher price is going to put that at risk. That is a huge difference - the iPhone is actually significant in the UK market, but has pathetic market-share in Continental Europe.
Public perception of Apple in Europe is already broadly negative due to massive tax evasion (yes, they have been investigated and fined, so we can call it that now - no more of this 'avoidance' spin BS). This isn't going to go down well with UK customers, that's for sure.