He knew it even before they did.
How could he not notice the longing direction casted at each other when it was the same expression he sends to Arthur when he thought no one was looking? Both Gwen and Lancelot wear their hearts on their sleeve.
He is unsure if he should be happy because this means Arthur would be free or sad because the betrayal would break him.
In the end, he decided to let nature take it course, he has learnt from Morgana that meddling wouldn't really change the outcome of what was supposed to happen.