Cathedral in a lovely setting (3)

I believe the answer is:

ely

'cathedral' is the definition.
(cathedral city in Cambridgeshire)

'in a lovely setting' is the wordplay.
'in' says the answer is hidden in the clue.
'ELY' can be found hidden inside 'lovely setting'.

(Other definitions for ely that I've seen before include "See" , "English cathedral city" , "UK city" , "Fenland cathedral town" , "Cathedral city in Cambridgeshire" .)

I've seen this clue in the Evening Standard.

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