In a small bowl, sprinkle the yeast over the lukewarm milk and stir to combine. Let sit at room temperature until frothy, about 10 minutes.
In the bowl of a stand mixer fitted with a dough hook or a large bowl, combine the flour, sugar, salt, and lemon zest.
Mix in the activated yeast with milk, butter, and egg until a soft dough comes together. If too crumbly, add a little more milk. If too wet to handle, add a little more flour.
Knead on a lightly floured surface until the dough becomes smooth and elastic. Place in lightly greased bowl, cover, and let rise at room temperature until doubled, 1-2 hours.
In a small bowl, whisk together the egg yolk and milk to form the egg wash.
Lightly flour a large work surface.
If you want to make the braid on top of the pretzel, break off 1/4 piece of the dough and cover with a cloth.
Roll the larger piece into a long rope, with a thicker diameter in the center and tapered ends.
Place a piece of parchment the size of your baking sheet under the middle of the rope. Twist the ends together and place over the middle of the rope to form pretzel shape.
To make the braid, cut the set aside dough into 3 equal pieces. Roll each piece into a long, thin rope. Pinch together the edges at one side and tightly braid. Seal the edges on the other side.
Brush the lower, thicker part of the pretzel with the egg wash, top with the braid, and gently press down to seal.
Gently transfer the parchment with the pretzel to a baking sheet. Adjust the shaping as needed.
Cover the entire pretzel with a cloth and let rise until puffy, about 30 minutes.
Place rack in center of oven and preheat to 350˚F (180˚C).
Brush the entire surface of the pretzel with the egg wash. If desired, sprinkle with pearl sugar.
Bake in preheated oven until golden brown, about 25-30 minutes. Allow to cool on baking sheet for 15 minutes before serving.
Serve warm with butter and/or jam.