I speak from experience on the issue in general, not specific to engagement, although I think it would follow the same lines. The best thing is honesty, with sensitivity and empathy. Oddly enough, its a lot worse to hear that someone showed pity rather than just talking openly and honestly. Don’t make her feel like a nebech, just show her that you care and can still be friends. (This may be very important depending on her circle of single friends and her past experiences with single friends getting married.) Tell her that you will keep her in mind for dating opportunities (and actually do so) and in davening. During an open moment, (if its ok with you) you can also ask if she’d like to hold your jewelry during the chuppah and see how she responds. Basically, be open and honest, sensitive, and take cues from her.
Speaking from experience, there is a very fine line between sympathy and empathy and its a VERY easy line to cross, so IMO, being extra sensitive is always a good thing.
Practically, you may want to give her a bit of a heads up and tell her that you’re dating someone seriously so its less of a shock.
I commend you for your sensitivity and thoughtfulness to your friend. Much Hatzlacha.s