In a large saucepan, bring the milk and butter to a boil,reduce heat. Add cheddar cheese; whisk until smooth. Remove from heat. Add cream cheese, mustard, and hot sauce; whisk until smooth. Season to taste with salt and pepper. Tranfers sauce to serving dish. Serve sauce warm with pretzels. If the sauce starts to cool and firm up, heat it in the microwave on low power, stirring frequently.