Britain had the lead midway through the two-day first phase of the team competition, but reigning Olympic champions Germany were not properly on the scoreboard yet.
Team veteran Carl Hester was on top for Britain after day one with a strong though not outstanding score of 77.720 percent. Teammate and world No. 2 Laura Bechtolscheimer was second on 76.839 percent, but was unhappy with her score.
"I am a little bit baffled at the moment at by far my lowest score in many years. I wasn't expecting that. I felt like I had a good ride, bar a little mistake at the end of the canter extension," she said.
"I was pretty disappointed, especially for my team. We were hoping we'd get a good 80 (percent) score like we usually do."
Hester said Bechtolsheimer's horse Mistral Hojris, nicknamed Alf, could be edgy around major crowds but there was still plenty of time in the five-day competition.
First-placed Hester paid tribute to his horse Utopia, and believes the competition, which went under a change in format, is suited to the horses of his teammates – including Charlotte Dujardin.
"He's the coolest horse around. If I say walk, he walks, if I say stop, he stops. He's a bit like a computer with a furry body,” said Hester, who made his Olympic debut 20 years ago.
"Valegro and Mistral Hojris are both hot horses, and having another chance to compete in the grand prix special just might help them."
The remaining 25 riders, including top-ranked Adelinde Cornelissen of the Netherlands, Britain's Charlotte Dujardin, whose horse Valegro earned a world record score for the grand prix special earlier this year, and strong German contender Helen Langehanenberg will complete the grand prix test on Friday.
In the grand prix, horse and rider must execute a pre-set series of precise and demanding movements, including the lofty trot called the passage and the pirouette.
British fans got a first glimpse of Rafalca, the horse that has vaulted into the headlines in the run-up to the U.S. elections, as the "dancing horse" performed under the watchful eye of famous part-owner Ann Romney, wife of U.S. Republican presidential candidate Mitt Romney.
U.S. Democrats have brandished Rafalca a symbol of a U.S. Republican presidential candidate who is out of touch with the common man and she has quickly become the most famous dressage horse in America.
Wary of being seen as an elitist, the multi-millionaire Romney distanced himself from Rafalca in a TV interview from London last week, saying he was paying little attention to the dressage event.
U.S. rider Jan Ebeling said the political fuss had no impact on his preparation for his first Olympics.
"There certainly was a lot of media attention going on but I think it turned out to be a good thing for the sport. And I don't really get distracted by these things," he said.
And the world's most famous dressage horse? "I think she's peaking just at the right time."
The top seven three-member teams and the top 11 individuals from the two days then go through to the Aug. 7 final of the team competition, where riders will perform the more technically demanding grand prix special test.
The top 18 riders after the grand prix special go through to the Aug. 9 freestyle, where riders design their own programme of movements and set it to music.
Three-time individual Olympic champion Anky van Grunsven of the Netherlands lay in fifth after a good test on Salinero, the horse she rode to gold in the 2008 Olympics.
If she picks up a medal here, she will break the record for the most Olympic hardware won by an equestrian. She said she was unaware of the record.
"This time I am only here for the team," she told reporters. "If it was for my own result, I could have stayed at home. I do not have a good chance this time."
The world's second-oldest Olympian, 71-year-old Hiroshi Hoketsu of Japan, and his horse Whisper stood in 17th place as they performed a test that had the crowd roaring.
Bad luck continued to dog Canada's equestrians as their dressage squad was cut from the competition. Capital, ridden by David Marcus, spooked repeatedly in his test and was eliminated for going over time.
A new format launched at this Olympics has seen dressage team sizes cut to three, so any elimination knocks the whole team out of contention.
"Things were going fine until he spotted a TV camera in the corner and the crowd were moving around in their seats due to the rain and it all went wrong," said the U.S.-born Marcus, who took Canadian citizenship just before the Olympic deadline in 2011.
"It was totally out of character and I am desperately disappointed."
The Canadians were also knocked out of team eventing after three falls in Monday's cross-country. A fourth rider dropped out before the jumping with only Jessica Phoenix and Exponential finishing the competition.
Canada's jumping team, which took team silver and individual gold in 2008, could make up for this week's disasters when it takes centre stage next week.
"We have a strong team," said reigning individual Olympic champion Eric Lamaze, whose gold medal horse Hickstead died tragically in the ring last year.
"Coming to the Games this time, I'm not feeling like I'm defending my title without Hickstead. But I've got a good young horse here and a great team."