Pippa Middleton Shows Off Huge Engagement Ring and Says She 'Couldn't Be Happier'

Pippa Middleton is engaged – and she’s got the ring to prove it!

Princess Kate‘s sister, 32, flashed her huge new rock to photographers outside her London home Tuesday morning, adding that she “couldn’t be happier” to become the fianc e of financier James Mathews.

“Miss Pippa Middleton and Mr. James Matthews are delighted to announce they became engaged on Sunday, July 17 and plan to marry next year,” the pair said in a statement.

Mathews reportedly got down on one knee to propose to Middleton on Sunday during a romantic break in the beautiful surroundings of the Lake District in northwest England. The proposal was so sudden that it took friends and family completely by surprise.

“They make a wonderful couple and we wish them every happiness together,” proud dad Michael Middleton said in a statement Tuesday.

A Kensington Palace spokesman said, “The Duke and Duchess of Cambridge are absolutely delighted with the news.”

An excited family friend tells PEOPLE, “Woo hoo! She kept that under the radar! Good move!”

Middleton and Matthews first dated in 2012 before subsequently splitting. The fitness fanatic then dated Nico Jackson for three years until they split in 2015.

Three months later, the couple re-lit their flame when, Matthews, 40, was spotted by Pippa’s side during a St. Barts vacation with her younger brother, James Middleton.

“I saw them a couple of months walking around the village – just casually strolling through the woods having a chat. They seemed very happy together,” says the family friend, adding, “”It’s wonderful news. I’ve met James and a he’s a really nice guy.”

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Matthews, who runs Eden Rock Capital Management in London’s swanky Mayfair district, also vacationed with Pippa and her parents Michael and Carole Middleton in August, at his parents’ hotel, Eden Rock, in St. Barts.

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“Her parents really do like him a lot and he spends quite a lot of time with the Middletons. Carole in particular is very approving. Everyone agrees that they are very well-suited in many ways,” a source tells PEOPLE.

Given that she’ll soon be part of the family, it’s safe to assume that Middleton will be free to return to the white sand beaches of the Caribbean whenever she wants – a fact that’s not been missed by her friends.

“The family have the St. Barts hotel,” adds the family friend. “So at least she’s sorted for holidays!”