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.
The palette is 7 bits:
|least significant bit of blue
|least significant bit of red
|least significant bit of green
|half bit intensity on all colours
|most significant bit of blue
|most significant bit of red
|most significant bit of green
Originally the machine was envisaged to have 256 colours but limited to 64 colours on the development machine due to a shortage of pins on the ASIC that was to be used, see Hardware Bugs but had the extra intensity (BRIGHT) added on Simon Goodwin's suggestion in it's pre-ASIC design stage to give 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.