LONDON - British Brexit Secretary David Davis has resigned because of how a meeting to hammer out a cabinet agreement for Prime Minister Theresa May's plans to leave the European Union was handled, a source close to the minister said on Sunday.

The loss of her Brexit negotiator just two days after the meeting at May's Chequers country residence is a blow to the prime minister and underlines the deep divisions in her ruling Conservative Party over Britain's departure from the EU.

"He is exchanging (resignation) letters with the PM," the source said. When asked why he was resigning, the source added: "Chequers."

After an hours-long meeting at Chequers, May seemed to have persuaded the most vocal Brexit campaigners in the cabinet, including Davis, to back her plan to press for "a free trade area for goods" with the EU and maintain close trade ties.

Sterling was little changed after the news of Davis' resignation and stood at just over $1.33. 

Agencies