Sift flour into a large bowl. In the center of the flour make an opening (pushing flour to the sides).
In a small bowl, combine the water and milk. Pour into the center of flour.
Add salt to water, lightly stir. Sprinkle yeast over top of water and sprinkle sugar over yeast. Let the yeast active, it will become foamy (3-5 minutes).
In a small bowl, whisk egg. Once yeast is foamy add egg to the water and whisk until egg is incorporated. With your hand, slowly start adding flour to the water and mixing. Mix until dough is lumpy. Transfer dough onto surface. Knead 6-8 minutes until dough is smooth and flour is well combined. (Dough should not be sticky.)
Lightly grease bowl with cooking spray. Place dough into bowl. Cover bowl with plastic wrap and cover with a kitchen towel to keep warm. Let the dough rise 1 hour, it will double in size.
Gently, divide dough into three parts. Roll out each part into about 15-inch ropes. It’s easiest to roll out by starting with both hands in the middle of the rope and pull to sides as you roll. Repeat until the ropes are the same in length.
Braid loosely, tucking edges under braid. Once braided, stretch the middle out gently. Brush top of braid with oil or water and cover loosely with plastic wrap (I like to lightly spray the plastic wrap with cooking spray so it doesn’t stick to the dough once it’s being removed.) Let the braid rise another 45 minutes, the braid will double in size.
Preheat oven to 375°F.
Whisk egg yolk and water. Brush braid with the egg wash, sprinkle with poppy seed (optional).
Bake braid 25-30 minutes, until golden brown.