When you are transferring money, you are basically buying another currency. For example, you may be holding sterling and need to pay a bill in USD. In other words you need to buy USD.
Whilst buying a currency may seem a little different to most purchases you make, it is in effect exactly the same. The item you want to buy has a price tag attached to it and currencies are no different.
When you want to buy a currency, such as USD, this ‘price tag’ is expressed as an exchange rate. For example 1 GBP = 1.5 USD. In layman’s terms, one dollar and fifty cents will cost you 1 GBP.