This is the most common problem we find when checking bank reconciliations. You've likely recorded the transaction as a 'New Spend / Receive Money' from your dashboard, or used the 'Create' tab when reconciling.
The correct method is to record it as a 'New Transfer Money', or use the 'Transfer' tab.
FROM YOUR DASHBOARD
FROM YOUR BANK RECONCILIATION SCREEN
In both situations, Xero will ask you to select the bank account on the other side of the transfer.
When you reconcile the other bank account, it will come up as a green suggested match option. If you are transferring to a personal account that is not on the Xero dashboard, then you code it to drawings rather than transfer.
For the transfer option to work correctly, there must always be an in and an out in the bank accounts on the Xero dashboard.