Mercedes Team Principal Toto Wolff believes McLaren is "in the fight" with the top Formula 1 teams at this weekend's Hungarian Grand Prix.
McLaren brought significant updates to their car in the last two races, which benefited them at the high speed Austria and Silverstone circuits.
The team expects it to be a different story at the Hungaroring given its characteristics, but Wolff still thinks they pose a threat to the current running order at the top.
"Several teams have made big gains recently. This has brought some into the fight with us, especially McLaren," Wolff explained.
"It has been impressive and gives us encouragement that we can also continue to find gains. We relish that challenge and will bring our own steps in due course."
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Wolff keen to see how updates work at Hungary
Mercedes will be bringing further car updates to the W14 to the Hungaroring, after falling behind in the tight development war behind Red Bull.
"The Hungaroring is a circuit that is quite different in nature to Silverstone," Wolff added.
"It will be interesting to explore how our latest upgrades perform in the long-radius, slow-speed corners."
George Russell took a shock pole position at Hungary last year in the W13, after the changeable conditions mixed up the order.
Wolff expects it to be stronger for Mercedes this season given where their car is relative to last year.
"We have good memories from Hungary last year, with George's first pole position in F1 and a double podium for the team. This race also marks a decade since Lewis' first win with us, so it's a circuit full of good memories," he said.
"Hopefully we can have another strong showing this time out. We want to build on the positive momentum from Silverstone and take the fight to our rivals."