rusting question

Fe is more reactive (at a higher position in electrochemical series) than Cu. Thus, Fe is oxidized to Fe2+ and releases electrons.
Fe(s) → Fe2+(aq) + 2e-(aq)

Electrons flows from Fe to Cu. In the presence of water, oxygen in water accepts electrons and is reduced to give OH-(aq) ions.
2H2O(l) + O2(g/aq) + 4e- → 4OH-(aq)
The OH-(aq) formed will change the phenolphthalein indicator to pink.