But when you convert $1000 to £625, that does not mean you are only getting 625 US dollars' worth of currency. One pound buys more than one dollar, and £625 might not buy as much as $1000, but it will definitely buy more than $625.
You're not losing 35% in purchasing power. The fact that the UK is generally more expensive than the US is one thing, but you're still not losing anywhere near 35% when you convert dollars to pounds.
And yes, you should stop converting things back into dollars in your head.