Darren Clarke, who shared the first-round lead with Peter Hanson, shot 70 on Friday and is alone in second place at 8-under-par 136.
Stephen Gallacher and Peter O'Malley each posted 66s in round two to move into a share of third place. They are both at minus-7 and were joined there by Ian Poulter (69), reigning U.S. Open champion Michael Campbell (70) and Johan Edfors (69).
Casey opened on the front nine with a birdie at the first. He came back with a birdie on the third, as he birdied each of those two holes for the second day in a row. Those birdies moved him to minus-7.
The Englishman dropped in the third birdie of his round on the sixth. Casey made it two in a row with a birdie on the seventh. He parred five straight around the turn from there.
The 28-year-old moved to 10 under with a birdie on the 13th. Casey birdied the par-5 15th for the second straight round before parring the final three holes to lead by three and close his second straight bogey-free round.
'There's a lot of golf left,' Casey admitted. 'I've been fortunate to keep it out of trouble. I'm obviously going to aim to do that over the weekend, but there are other guys behind me who I am sure have had their ups and downs and they could get a run going over the weekend. It is far from over.'
Clarke got going with a birdie on No. 2. He got to 8 under with a birdie at the fourth. However, Clarke gave a stroke back to par as he bogeyed the par-3 seventh.
The Ulsterman parred six consecutive holes from there. Clarke slipped back to even-par for his round and minus-6 overall after a bogey on the par-3 14th.
Clarke came back to birdie 15 and made it two straight as he also birdied the 16th to get within three of Casey's lead.
'It's an awful lot closer to the lead than I thought I was going to be,' said Clarke. 'I've hit quite a few good shots and if I can do that and roll a few putts in again tomorrow, hopefully I'll close the gap.'
Hanson managed an even-par 72 at The Belfry and slipped into a tied for eighth at 6-under-par 138. He was joined there by Gary Emerson (70), Jarmo Sandelin (71), Graeme Storm (64) and Graeme McDowell (68).
The cut fell at even-par 144 with 70 players advancing to the weekend. Among the notables missing the cut were: Johnnie Walker Classic winner Kevin Stadler (145), four-time European Ryder Cupper Lee Westwood (145), last week's Italian Open champ Francesco Molinari (145), 1999 British Open champion Paul Lawrie (147) and eight-time Order of Merit winner Colin Montgomerie (147).