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Nottingham Forest returned to the top of the Championship despite a sweet strike by Watford's Lewis McGugan denying his former side victory.

Andy Reid fired Forest in front after Marco Cassetti had given the ball away.

Henri Lansbury also struck a Watford post, but McGugan curled in a superb second-half free-kick to equalise.

McGugan and Sean Murray forced smart saves from Karl Darlow, and Watford's Ikechi Anya and Forest's Ishmael Miller came close in a frenetic finish.

Forest youth product McGugan, often criticised for his inconsistency during his seven years at the City Ground, only left the club for Watford this summer and has already reminded his old side what they are missing.

The 24-year-old left Darlow with no chance from a sweetly hit 20-yard free-kick - the first league goal Forest have conceded this season - and showed respect for his former employers by refusing to celebrate.

Forest should feel optimistic about a resolute performance that almost maintained their 100% winning record.

The quality of Watford's passing and Forest's defensive stubbornness suggests both will be in the reckoning for promotion come May.

The Hornets were dedicated to playing the ball out from the back and that cost them an early goal. Cassetti misplaced a crossfield pass into the path of Reid, who fed Jamie Mackie before receiving it back inside the area and rifling into the top corner.

Cassetti would fail to learn from his mishap, gifting the ball once again to Reid, who released Lansbury for a shot that came back off Manuel Almunia's post.

Watford striker Troy Deeney planted an inviting header wide, but Forest looked impregnable in the first half, allowing Watford, and more specifically the impressive Diego Fabbrini and Almen Abdi, to retain possession on the edge of their area.

But the second period became an open encounter, with McGugan almost crowning his performance when forcing Darlow into a fine stop and substitute Murray hitting straight at the visiting keeper from 12 yards.

Greg Halford and Mackie were thwarted by Almunia on the break and the Spanish keeper touched Miller's effort on to a post.

Watford pushed for a winner with Anya coming closest when Darlow tipped his effort around the poat, but Forest's organised back four held firm, ensuring both sides remained undefeated.

Watford manager Gianfranco Zola:

"It's one of those games I'm sure the crowd enjoyed, but certainly not the managers.

"I think it was too open. It gives me a lot of points to coach and a lot of indications on how we can improve the team.

"We know we have to defend better than we are at the moment. I also know if we want to be an offensive team we can't be perfect at defending as well.

"I was about to substitute off McGugan before the goal. He looked tired. I left him on the pitch and he almost scored a second."

Nottingham Forest assistant manager David Kelly:

"What's that old saying about a good advertisement for the Championship? It was a good game.

"I'm really pleased with how we played and how we attacked. I'm very disappointed with the goal - we worked all week on set-plays and people being in certain positions in the wall.

"But it's a good point against one if the teams that are going to be up there challenging.

"We had enough chances to finish the game off well before they scored."