You have a hypothesis h = "it's raining somewhere in England" and evidence e = "it's raining in London". You have an empirical theory that e implies h, which may or may not be true depending on whether London is in England in your universe, but you don't know which universe you live in. There are also universes where London is not in England but your theory is still true for some complicated meteorological reasons that are unknown.

For all h and e, you can always write (using C bitwise operations to denote logic) h = (h | ~e) & (h | e). The second factor (h | e) is the part which logically follows from the evidence, that is, it is true in all universes in which e is true. The first factor is the part that is not logically implied by the evidence, that is, there are universes where it is raining in London and yet h is false because London is not in England.

Now the real question: somebody tells you that it is raining in London, so your credence in e goes up. What happens to the probability of (h | ~e)? It should go down, because as e becomes "more true", ~e becomes "more false", and thus (h | ~e) becomes more false in the sense that there are fewer worlds where (h | ~e) is true.

But (h | ~e) is the same as "e implies h", which is your empirical theory. So your belief in the theory should go down as you gather more evidence. Another way to say it is that, as the evidence becomes stronger, the part logically implied by e becomes more likely, and whatever remains (h | ~e) becomes a smaller set of possibilities, so it is less likely.

Note that your belief in (h | ~e) goes down, but your belief in h goes up. I think Deutsch's criticism is that people confuse the two, and they think that evidence increases the credence in the theory instead of the hypothesis.