Preheat oven to 400 degrees.
Place flour, baking powder, butter and salt into a food processor and pulse.
Finely grate cheddar cheese. In bowl combine flour mixture, grated cheese, mustard, pepper and mix to combine.
Add cold milk and stir gently to combine.
Turn onto the counter and gently press together to for a dough. Cut into 8 equal pieces and place onto a baking sheet.
Mix egg yolk with water. Brush top of scones with egg yolk then place into preheated oven and bake for 17-20 minutes until the tops are golden brown.
Remove from oven and serve warm.