I had forgotten what a delightful song this was (and an unusually chaste video to boot):
It's the La's, from Liverpool (natch), from 1988, with the original version of the song that was later a hit for Sixpence None the Richer. I had also forgotten how thin the recording was; so light-sounding for its time. It was called neo-Merseybeat, but it sounds more like sunshine pop. Best of luck getting it out of your head.