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Has anyone tried switching the location of their server to the home country of the site and noticed any changes to natural search positions?
Any advice would be greatly appreciated.
I have no experience as to whether hosting in the UK will actually benefit a .co.uk domain, although links from UK based sites does appear to help.
the big advantage of US hosting is that it costs much, much, much less than the UK and (in my experience) is more reliable too - assuming you don't go for rock-bottom pricing, which doesn't exist in the UK, anyway.
Geolocation is not important within the UK (so far), and the .co.uk is enough to tell Google which country you are in. Historically, you've needed EITHER UK hosting OR UK tld - not both. I've seen no evidence that this has changed.