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F&O3.0 states in 9.8.4.1 The picture string "Whitespace within a variable marker is ignored." Since the variable marker may contain a "first presentation modifier", which may be "... any format token permitted as a primary format token in the second argument of the fn:format-integer function" and whitespace might form a part of such a primary format token (e.g. as a grouping separator), is this correct? I'm not sure there are any tests covering whitespace in the picture string, such as the following: format-date(xs:date('2034-01-02'), "[ Y 9 999 ]")
Thanks for reporting it. Given that the same text was present in XSLT 2.0, I'm inclined to say that we should take it to mean what it says: whitespace is stripped from the variable marker before you do anything else, which means using space as a grouping separator is not possible. That's not the spec I would write if I were writing it today, but it's hard to argue that it's unclear or contradictory.
In that case, I'll convert it to a bug against the test suite as a reminder that whitespace in variable markers appears not to be covered. If you concur that format-date(xs:date('2034-01-02'), "[ Y 9 999 ]") is '2034' I'll add it to the test suite in due course.
I've added test case format-date-028 to test this condition.