Cheesy Pretzels

1 1/2 cups all-purpose flour
2/3 cup milk
1/2 cup shredded cheddar cheese (2 ounces)
2 tablespoons butter or margarine , softened
2 teaspoons baking powder
1 teaspoon sugar
1 teaspoon salt
1 egg
coarse salt

Heat oven to 400°F. Grease cookie sheet. Mix all ingredients except egg and coarse salt in medium bowl with fork until soft dough forms. Smooth dough gently into ball on floured board. Knead 10 times. Divide dough in half. Roll half of dough into 12x8-inch rectangle. Cut rectangle lengthwise into eight 1-inch strips. Fold each strip lengthwise in half into 12x1/2-inch strip; pinch edges to seal. Twist each strip into pretzel shape. Place seam down on cookie sheet. Beat egg in small bowl with fork until blended.
Brush pretzels with egg. Sprinkle lightly with coarse salt. Bake 15 to 20 minutes or until golden brown. Remove from cookie sheet to wire rack. Repeat with remaining half of dough.