It’s one of Queen Elizabeth II’s favorite events of the year. So when she stepped out of her carriage for the annual Royal Ascot horse race on June 19, it was no surprise to see her beaming. But her majesty’s smile grew even bigger when she spoke to one person in particular that day: her new granddaughter-in-law, Meghan Markle. “The queen,” a source exclusively tells Life & Style, “was happy to have Meghan by her side.”

The monarch and the American duchess have become fast friends. “Since Meghan married Prince Harry [in May], she and the queen have become so close,” the source notes. “The queen has really gotten to know Harry’s bride and finds her utterly charming. She thinks everything about her represents the future of the monarchy.” But as Elizabeth, 92, turns her attention to Meghan, 36, she’s stepped into the middle of a rivalry between Harry’s bride and Prince William’s wife, Kate Middleton, who’s on maternity leave following the April birth of her third child, Louis. The two duchesses have a tense relationship, and Kate, 36, “is extremely bitter” that the queen is choosing sides, says the source. “She’s beginning to feel more and more shoved out now that Meghan’s in the picture.” Though Kate’s been in the family far longer, adds the source, she “isn’t as close to the queen as Meghan is now.”

kate middleton meghan markle queen

The monarch isn’t hiding her preference for Meghan. Unlike Kate, who had to wait until she married William in 2011, Meghan was invited to join the royal family’s Christmas celebrations when she and Harry were merely engaged. Then, less than a month after Meghan’s wedding, the queen invited the new Duchess of Sussex to join her on an overnight solo trip to Chester, England. Kate had to wait nearly a year after her nuptials to go on a solo engagement with the queen. “Kate and Elizabeth have a formal relationship,” notes the source. “Kate’s reserved and stiff in the queen’s presence, unlike Meghan, who’s always herself and doesn’t take it to heart if she messes up royal protocol.”

Elizabeth finds that refreshing. “The queen adores Meghan’s warm personality, intelligence, and sense of humor,” says the source. Things went so well on their laughter-filled June 14 solo trip that just days later, Meghan was invited to join the monarch, along with Harry, at her Queen’s Young Leaders Awards at Buckingham Palace on June 26, widely seen as yet another vote of confidence. Behind the scenes, they’re even closer. “Meghan has been to Buckingham Palace to have afternoon tea with the queen,” says the source, “and they gossip about all kinds of things, from Meghan’s charity work to stories about her acting career to how she’s adapting to royal life.”

meghan markle getty image

Elizabeth is also impressed that the former actress has managed to tame her famously wild grandson. “She’s proud of Meghan for throwing herself into royal life without any complaints — and Meghan is eager to please,” the source says. Meghan doesn’t want to fuel competition with Kate, “but she’s thrilled to have the queen on her side — and wants to keep it that way.”

For more exclusive celebrity news, be sure to pick up the latest issue of Life & Style on newsstands now.