Preheat the oven to 350 degrees. Coarsely chop dried cherries. Place chopped cherries and lime zest in a small bowl, toss with 2 tablespoons flour. Set aside.
In a medium bowl, whisk together the sugar, milk, oil, egg, vanilla and lime juice. In a large bowl combine the flour, baking powder and salt. Add the wet ingredients to the dry ingredients and stir until just combined. Gently fold the cherries and lime zest into the batter.
Pour the bread batter into a greased 9 x 5-inch bread pan. Bake at 350 degrees for 50-55 minutes. A toothpick inserted in the center of the bread should come out clean. Allow the bread to cool for 10 minutes, then remove the bread to a wire rack to cool.
Make glaze: In a small bowl whisk together powdered sugar, lime juice and lime zest. Drizzle over bread.