Ianto sees the way Jack looks at her.
He supposes that Jack thinks that no one notices—that Jack thinks he's being terribly subtle.
But he isn't subtle and Ianto hasn't been fooled for a second.
He sees the way that Jack, no matter who he's talking to, is always looking at her. He sees the way that when something goes wrong—life threateningly wrong—the first person Jack looks for is her. He sees the way that whenever she's in danger, Jack gets ready to do anything—absolutely anything—to make sure she's safe.
What's worse, is that Ianto knows exactly how Jack looks at her. Jack looks at her with undying devotion and respect...like he'd do anything for her. He looks at her like he loves her. He looks at her the same way he looks at Jack.
He should probably stop watching. But Ianto, apparently, is a bit of a masochist, so he continues to watch all the same.
Ianto watches Jack when Gwen talks about her engagement. He watches as Jack tries desperately to keep his emotions in check and his face blank. He watches as Jack smiles and tells her how happy he is for her. He watches as Gwen pretends not to give a damn, but stares at Jack every chance she gets.
If Ianto were a bigger man, he'd do something. He'd walk away from Jack and their dabbling and he'd tell the two of them to get over themselves and to get their shit together.
But Ianto isn't a bigger man. So at night (and sometimes during the day), he continues to go to Jack. He lets Jack do whatever he wants; he just sits there...lies back and takes it. He lets Jack whisper sweet nothings—things he's sure Jack would rather be saying to Gwen—in his ear and when he's feeling particularly generous, doesn't even tease when Jack quotes Shakespeare to him.
He pretends that doing all of the above doesn't hurt at all. He pretends not to notice when Jack looks at Gwen and not him. He pretends that while Jack's looking at Gwen, he's not looking at Jack. And he pretends that he doesn't see way Jack looks at her.
And Ianto's particularly good at pretending that Jack's in love with him, the way he is with Jack.
He's just very good at pretending full stop, actually.