Activate the spout layer and then go to Filter > Liquify. Using the Liquify Warp tool, choose a large brush size, then click and drag from the centre of the artwork in a gentle curve towards the upper right. Once you’ve finished warping, click OK to close the Liquify dialog.
Add a Layer Mask to the spout layer and use this to blend any edges that might need fine-tuning. The spout itself can be repositioned if necessary. Ultimately, we are going to blend the rainbow into the top of the spout, so use the Layer Mask to hide the top of the spout.
Now for the rainbow itself. Create a new layer at the top of the Layers palette called ‘rainbow’. Note that if you haven’t used the Rainbow gradient before, it will need to be loaded into the gradients swatches. Click the gradient drop-down box button on the tool options bar, then click the pop-up menu button in the top-right corner of the palette. Choose Special Effects.