  We present evidence for the existence of a spontaneous instability towards an
orbital loop-current phase in a multiorbital Hubbard model for the CuO$_2$
planes in cuprates. Contrary to the previously proposed $\theta_{II}$ phase
with intra-unit cell currents, the identified instability is towards a
staggered pattern of intertwined current loops. The orbitally resolved current
pattern thereby shares its staggered character with the proposal of d-density
wave order. The current pattern will cause a Fermi surface reconstruction and
the opening of a pseudogap. We argue that the pseudogap phase with
time-reversal symmetry breaking currents is susceptible to further phase
transitions and therefore offers a route to account for axial incommensurate
charge order and a polar Kerr effect in underdoped cuprates.
