An exchange rate compares two currencies. The number only makes sense once you know which currency it measures and which it measures against. Using GBP/USD as the example, here is everything you need to read a quote correctly.
Base and quote currencies
Every rate is written with two currencies. The first is the base; the second is the quote (or counter) currency. The number tells you how many units of the quote currency you get for one unit of the base. So GBP/USD = 1.27 means one pound buys 1.27 dollars: GBP is the base, USD is the quote. Reading it backwards — “a dollar is worth 1.27 pounds” — is wrong.
The inverse rate is just 1 ÷ rate
If you know one direction, you know the other. USD/GBP = 1 ÷ GBP/USD. If GBP/USD is 1.27, then USD/GBP is 1 ÷ 1.27 ≈ 0.787. That is why this site has a GBP to USD page and a USD to GBP page but only one underlying rate: to convert pounds to dollars you multiply, and to convert dollars to pounds you divide.
Bid, ask and the spread
Anywhere you can actually transact, there are two prices: the bid (what the market will buy the base currency from you for) and the ask (what it will sell to you for). The ask is always higher; the gap between them is the spread. The single figure shown on news sites and on this site is the mid-market rate, halfway between bid and ask — a fair benchmark that nobody actually trades at. Real consumers transact on the wrong side of a wider retail spread, which is why your bank’s rate looks worse (see mid-market vs bank rates).
Pips: the unit of movement
For most pairs, including GBP/USD, a pip is the fourth decimal place — 0.0001. A move from 1.2700 to 1.2750 is 50 pips. Pips are how traders measure and discuss movement; for everyday conversion you rarely need them, but they explain why FX rates are quoted to four decimals. More in pips, lots & leverage.
Why two sites show slightly different numbers
Two reputable sources can show GBP/USD a few ten-thousandths apart at the same moment. The rate moves continuously, different providers sample different dealers at slightly different times, and rounding to four decimals already discards detail. A small gap is normal; a large one usually means one source has stale data — check the timestamp.