Hydrogen pick-up and hydride precipitation can lead to embrittlement and fracture strength reduction of nuclear fuel cladding tubes made of Zircaloy. Plastic deformation of hydride packets and its interaction with local plasticity in the zirconium matrix is a key linkage of microstructure feature to structural integrity of hydrided polycrystalline bulk Zircaloy. This work focuses on explicit representation of hydride packets from high spatial resolution electron backscatter diffraction onto a crystal plasticity finite element model for capturing and understanding slip localisation near hydride-matrix phase boundaries, based on the extracted material property of hydrides. The mechanisms behind slip evolution including slip nucleation, slip transfer, and slip inhibition are studied by combined high-resolution digital image correlation and crystal plasticity results. Through assessing various slip transfer parameters, new slip transfer criterion is proposed for α/δ phase boundaries. Prior to slip transfer criterion, local micromechanical quantities, specifically shear stress and stored energy density, are necessary to drive and provide pathway for subsequent slip transfer at α/δ phase boundaries.