Will you go back into explaining how the English defeat came about, or do you just posit it as a given fact?
And what's the situation in Scotland and Ireland? At that time, Scotland, of course, was still independent, but I assume a protestant Scotland and a (officially) Catholic England are uneasy neighbours?
BTW, subscribed.
Facts will be filtered down through the narrative. I can tell you the POD right now though.
Upon entering the English Channel, the Duke of Medina Sidonia listens to his advisors and attacks the port of Plymouth, where several English ships (including the HMS Revenge amongst others) were at port, catching them at a vulnerable position where the English ability to out-manuever the Spanish fleet was impossible. This greatly weakens the English fleet, and allowed for further Spanish victory along the way. The Duke of Parma, hearing that the Armada is actually succeeding, makes his way to Dunkirk as planned (though perhaps a couple days late) and the invasion begins.
How ever, this is not the only POD as there are a couple others that you will notice as time goes on.
The situation between England and Scotland is pretty much as you described, but heightened a bit because Scotland is a firm ally of France, which is currently going through its own Reformation/ Wars of Religion, and Spain is exerting its power there to try to keep the country Catholic.