Carla - from Calgary, Alberta
The easiest way would be to use colored fondant and cut arched strips for your rainbow . Not sure how large the rainbow will be, but use a small bowl or custard cup as a guide for yoour arch, and use a knife to cut the rolled out fondant.
You could also use logs of colored fondant. Arrange them in an arched pattern on your cake.
Finally, if the cake is covered in fondant, you could use icing color thinned with clear vanilla extract, and paint the rainbow on the cake.