Catriona Matthew, Anna Nordqvist and Morgan Pressell are within three shots of the lead and are tied in 6th position.
19 year old Thompson, a three time LPGA Tour winner but without a major championship to her name as yet, has played well this season finishing 3rd last week after a 5th place finish in Thailand.
"I had a little bit of a slow start, said Thompson.
"I parred my first five holes. But I struggled a bit yesterday on the greens, just struggled to get my putts to the hole, but I figured out some things after my round yesterday with my putting and some of my iron shots. So I would say mainly just committing to my iron shots, hitting some good ones in there and draining some nice putts on the back nine especially.
Thompson is also working on a new attitude on the golf course. "I just went into last week and just tried to have fun out there, laugh in between shots, get my mind off the game, and same thing with this week. Just go out there and relax.
"Even though it's a major, it's just a golf tournament, so just going out there and having fun. But I worked extremely hard in the off season on my short game and just trying to get my game a lot more consistent. I think that's showing in the last few weeks, so hopefully it'll show even more."
Pak who won the first of her five major championships 16 years ago and today she too spoke of her more relaxed feeling on the golf course. "Like right now, I just feel so calm. I don't know why, just excited. But normally I give myself a lot of pressure, just trying to do so hard the golf course. I've been here so many times I know what exactly I need to do. That gives me a lot more pressure, and having a lot of hard time myself.
"But this week this is probably the best moment like it just feels good. Just feels really calm, go out there, just everything seems to feel comfortable. It just makes me so easy. I don't know why just making everything throughout the round has been so perfect, so that's a perfect feel for me."
Brilliant West Australian amateur, Minjee Lee, and Karrie Webb lead the Australians in 19th position while New Zealander Lydia Ko also improved on day two to be on the same score and six shots from the lead. That trio are not without their chance over the weekend as things begin to get a little more tense.
Victorian amateur Su Hyun Oh birdied her final hole of the day to finish one shot inside the cut line