Britain's top U.K. lawmaker tasked with leading Britain's exit negotiations with the European Union has resigned Thursday, throwing the recently agreed deal to take the United Kingdom out of the bloc in chaos and threatening the leadership of Prime Minister Theresa May.

Dominic Raab, the so-called Brexit secretary, issued a statement on Twitter Thursday that indicated his inability to support May's agreement, which was reached last night among her most senior party colleagues after a five-hour meeting in which she attempted to win support for her plan to keep portions of the U.K. economy, including Northern Ireland, as closely aligned as possible to the EU Single Market. His decision was followed by another senior cabinet departure, with Work and Pensions Secretary Esther McVey submitting her resignation to the prime minister. 

"I regret to say that, following the Cabinet meeting yesterday on the Brexit deal, I must resign," Raab wrote in a letter to the Prime Minister. "I understand why you have chosen to pursue the deal with the EU on the terms proposed, and I respect the different views held in good faith by all of our colleagues."

Today, I have resigned as Brexit Secretary. I cannot in good conscience support the terms proposed for our deal with the EU. Here is my letter to the PM explaining my reasons, and my enduring respect for her. pic.twitter.com/tf5CUZnnUz

— Dominic Raab (@DominicRaab) November 15, 2018

The pound fell sharply following Raab's resignation on fears that it could trigger a wider leadership challenge for May and, possibly, fresh national elections in the United Kingdom early next year. Sterling was marked 1.7% lower against the U.S. dollar at 1.2795 in London, while European stocks reversed earlier gains and slipped into negative territory. 

Britain's FTSE 250, a broader benchmark for domestically focused U.K. stocks, was marked 0.1% lower following Raab's decision, as Barclays' Plc (BCS)  slumped more than 5.6% and government-backed Royal Bank of Scotland (RBS) shed 5.3%.

"The government is falling apart before our eyes as for a second time the Brexit secretary has refused to back the prime minister's Brexit plan," Labour's shadow Brexit secretary, Jon Trickett, said in a statement. "This so-called deal has unraveled before our eyes."

"This is the 20th Minister to resign from Theresa May's government in her two year premiership," he added. "Theresa May has no authority left and is clearly incapable of delivering a Brexit deal that commands even the support of her cabinet -- let alone parliament and the people of our country."

Raab is the second Brexit secretary to resign his post in defiance of May's attempts to broker an agreement with the EU, following the departure of David Davis in July. His move to leave the government, however, may also trigger an attempt by Conservative party lawmakers to build the case for a leadership challenge that could oust May and install a new Prime Minster.

On the Betfair exchange Raab now becomes the new favourite to succeed TMay pic.twitter.com/mHMF6T530f

— Mike Smithson (@MSmithsonPB) November 15, 2018

At least 48 Tory party lawmakers would need to write letters to the so-called 1922 Committee in order to force a broader vote of their 315 members of Parliaments to either back May or propose a new prime ministerial candidate.

��������#QUICKGUIDE: How to trigger a leadership challenge in the UK Conservative Party. $EURGBP #Brexit pic.twitter.com/NMIFf4PIfs

— Danske Bank Research (@Danske_Research) November 15, 2018

Replacing May would not only throw the entire government into chaos, it could also upend the very deal May negotiated with EU leaders in Brussels only hours earlier. The top EU negotiator, Michel Barnier, as well as European Council President Donald Tusk, said earlier Thursday morning that barring "something extraordinary," European lawmakers would vote on the proposed exit agreement on Nov. 25.