in Brazillian portuguese it had a completely different meaning, and it was used for disambiguation of the pronounciation of some words, in short “gue” in portuguese can make a ghe (gh as in ghost) or a gue (gu as in guatemala), a similiar thing happens with “que”, this umlaug looklike was meant to make clear that the “u” was to be pronounced, so we had spellings like “freqüencia”