By employing a local two-fluid theory, we investigate an obliquely propagating electromagnetic instability in the lower hybrid frequency range driven by cross-field current or relative drifts between electrons and ions. The theory self-consistently takes into account local cross-field current and accompanying pressure gradients. It is found that the instability is caused by reactive coupling between the backward propagating whistler (fast) waves in the moving electron frame and the forward propagating sound (slow) waves in the ion frame when the relative drifts are large. The unstable waves we consider propagate obliquely to the unperturbed magnetic field and have mixed polarization with significant electromagnetic components. A physical picture of the instability emerges in the limit of large wavenumber characteristic of the local approximation. The primary positive feedback mechanism is based on reinforcement of initial electron density perturbations by compression of electron fluid via induced Lorentz force. The resultant waves are qualitatively consistent with the measured electromagnetic fluctuations in reconnecting current sheet in a laboratory plasma.