Cream butter with sugar until fluffy, then add eggs and beat another 2 minutes. Continue stirring and add lemon peel and rum. Mix flour with baking powder and add to butter mixture. Add well-drained raisins and walnuts and add milk as needed.
Grease a loaf tin with butter and pour in batter. Preheat oven to 200°C (fan oven 180°C) (approximately 400°F). Place pan in oven and bake until golden brown for about 40 minutes. Remove from pan, let cool and serve sprinkled with powdered sugar.