The Coupé’s palette is 128 colours of which 16 can be chosen (MODE1,2&4) or 4 in MODE3 - see Screen Modes.
The default colours are the same as the ZX Spectrum in pot positions 0-7, followed by the same colours again but changed to be equivalent to having the BRIGHT attribute being set.
MODE1 has a ZX Spectrum compatible FLASH feature, BRIGHT is supported via the upper 8 pot positions of the default palette but is transparent to the user when emulating Spectrum behaviour.
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 area on the Splash Screen or see the Fred 41 menu by Matt Round for a simple but effective example.
Complex real-time effects can be seen in more advanced demos such as The Lyra III, Mnemodemo II or in utilities such as BorderTron 3000.