if the couple indulging in fornication marry each other will their sin be forgiven or their punishmment eased?

Fornication is a major sin. In order for a major sin to be forgiven, one
must sincerely repent (make Tawbah) by regretting committing the sin and
making a firm conviction never to repeat the sin.

If one is sincere, Allah is Tawwaab (most forgiving)

and Allah Ta'ala Knows Best

Mufti Ebrahim Desai