In a medium bowl stir together flour and baking powder; set aside. In a large mixing bowl beat butter with an electric mixer on medium to high speed for 30 seconds. Add sugar. Beat until combined, scraping sides of bowl occasionally. Beat in egg until combined. Beat in as much of the flour mixture as you can with the mixer. Using a wooden spoon, stir in any remaining flour mixture.
Divide dough in half. Knead lemon peel and yellow food coloring into one portion of dough. Knead pistachios, almond extract, and green food coloring into the remaining portion of dough. Divide each portion in half and roll each portion into a 12-inch rope.
Place a yellow rope and a green rope side-by-side; press evenly into a 12x2-inch rectangle. Repeat with the remaining ropes to make a second 12x2-inch rectangle. Stack one rectangle on top of the other rectangle, alternating colors. Firmly press dough to seal layers; reshape stack. Cover and chill overnight.
Preheat oven to 350 degrees F. Lightly grease a cookie sheet; set aside. Cut stack crosswise into 1/4-inch slices. Place slices 1 inch apart on the prepared cookie sheet. Bake for 11 to 13 minutes or just until golden. Transfer to a wire rack; cool.