Townend and the grey Carousel Quest stormed into the lead yesterday, impressing the judges in the violently windy conditions to score 39.8 - the only combination to break under 40 penalties.
"I knew he was capable of a good test but I wasn't expecting to break the 40 penalty barrier," said Townend, who yesterday put in some last minute practice under the eye of trainer Ian Woodhead. "After working him for 10 minutes we decided he couldn't go any better and left it at that."
Townend took over the ride on the 14-year-old by Carousel - a son of Holstein jumper Caretino - from eventer turned show jumper Cressida Clague-Reading, who rode Carousel Quest to fourth place there in 2004.
"It's nice to have a horse where you just push the buttons instead of producing it," he said.
"He's quite a fragile horse both mentally and physically but he is a good horse and I am glad I bought him."
Townend has a five penalty lead over veteran New Zealander Andrew Nicholson, whose test with Nereo was in direct contrast to Thursday's flighty performance from his full brother Armada (69th) and was rewarded with an average mark of 70%.
"As you saw Armada is the more flamboyant one which goes for jumping as well," said Nicholson.
"Nereo has a much better mind and is also smoother to ride across country."
It is, however, the first four-star event for nine-year-old Nereo, one of the youngest in the field.
"It is a big step up for him but he has been incredibly successful at each level - at eight he was my reserve horse for Hong Kong.
"Mark Phillips has produced a very clever course. I think it's difficult. The bit we've lost was the smoothest galloping part and I think it will make it difficult to catch up with time. He has also utilised the undulating ground here very cleverly," Nicholson said.
Nicholson's compatriot Caroline Powell and the experienced Sea Crest 16-year-old Lenamore, are in third place just 0.2 behind. "He's grown up a lot in the last couple of years and is now producing consistently better tests. He would win a dressage test at home, but the atmosphere has always affected him."
The following three places are taken by Thursday's top three and Townend aside just 3.3 penalties separates second to tenth place.
First-day leader Phillip Dutton (US) is in fourth place, by just 0.1 of a penalty. William Fox-Pitt (GB), last year's HSBC FEI Classics winner, is in eighth place after a tactfully ridden test on Seacookie, but just 2.5 penalties covers the horses placed 13th to 19th.
First time Burghley contender Allison Springer from the US is seventh on Arthur. "Arthur can be such a spooky horse, but it's never in a bad way. He's a kind horse and today he was super good. I bought him as a five-year-old and produced him myself, so he's my boy and it's fun to have him here. I'd be kidding if I said I wasn't nervous about the Cross-Country, but I'm glad I'm on him," she said.
World Champion Zara Phillips, who is 16th equal on Glenbuck, was happy with her test. "He did some nice bits. It wasn't as good as it should have been, but we got some good marks and I'm pretty happy. I hope we've sorted out Glenbuck's problems. He's been suffering from a respiratory problem, which is why he got tired last year, but he now feels super-fit - I hope!"
New Zealander Annabel Wigley will be first on the cross-county course today at 11.00 with Black Drum and William Fox-Pitt the ultimate competitor with Seacookie at 16.16.
There are now 79 runners as Piggy French (GB) and Some Day Soon have withdrawn as they will now replace Mary King and Imperial Cavalier on the British team to contest the European Championships in Fontainebleu at the end of the month (23-27 September). King had to withdraw Imperial Cavalier after a training setback. It will be a senior British team debut for the 29-year-old Leicestershire rider.
1 Oliver Townend/Carousel Quest (GBR) 39.8
2 Andrew Nicholson/Nereo (NZL) 45.0
3 Caroline Powell/Lenamore (NZL) 45.2
4 Phillip Dutton/Truluck (USA) 45.3
5 JP Sheffield/Crown Prince Consort (GBR) 46.5
6 Kai Ruder/Leprince des Bois (GER) 46.7
7 Allison Springer/Arthur (USA) 47.3
8 William Fox-Pitt/Seacookie (GBR) 47.5
9 Matt Ryan/Bonza Puzzle (AUS) 48.2
10= Kitty Boggis/Boondoggle (GBR) 48.3
10= Sam Griffiths/Happy Times (AUS) 48.3
10= Karin Donckers/SS Jett (BEL) 48.3
14 HUGO'S THERE III/Neil Spratt 49.0
32= VORTEX/Tim Price 55.2
56 SPECIAL ATTORNEY /Dan Jocelyn 60.8
69 ARMADA/Andrew Nicholson 67.5
71 BLACK DRUM/Annabel Wigley 69.8