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The Coupé’s palette is 128 colours of which 16 can be chosen (MODE1,2&4) or 4 in MODE3 - see Screen Modes.

The palette can be altered on a per-line basis using the line interrupts in MODEs 2-4 to give multiple colours on screen or to produce effects in the border, see Fred 41 menu for a good example.

Originally the machine was to have 64 colours due to a shortage of pins on the ASIC, see Hardware Bugs and Limitations but intervention by Bo Jangeborg whilst writing Flash! upped it to 128:

“I convinced them to do away with the hardware flash in the high colour modes. That allowed for a significantly larger pallet. I think it went from 64 to 128 colours. That also allowed me to transfer some pictures from the Atari without too big a degradation.”