With a 12-under-par, three-round aggregate of 204, Nicholas leads by one stroke from the Japanese Hiromi Kobayashi, with Joanne Morley, of Cheshire, third on 208.
Nicholas started the day two strokes behind Morley but despite taking three putts on the first hole and dropping a shot, she knocked in eight birdies to take the outright lead.
Nicholas, who defends her Irish Open title next week, three-putted at the sixth but was out in 32 and two strokes ahead of Kobayashi. At the long 18th Kobayashi looked set to draw level when Nicholas hit her three- wood second shot into the sand. But she splashed out to eight feet and holed her birdie putt to stay ahead.
"Another 68 would be nice tomorrow," Nicholas said. "I am playing well but was between clubs a number of times today, which accounted for three of my four bogeys."
The defending champion, Laura Davies, armed with a new putter, had four birdies in a 70 but remains 10 strokes off the lead. "I hit 15 greens but nothing is going for me," said Davies, who drove out of bounds on the ninth hole.Reuse content