Franklin Templeton's Zahn likes UK gilts, says BoE could cut rates soon

LONDON, Feb 9 (Reuters) - The Bank of England will probably need to cut rates sooner than other big central banks, meaning a favourable outlook for UK governments bonds, Franklin Templeton's head of sustainability and European fixed income David Zahn said on Friday.

"We have been more constructive on the UK, we think they (Bank of England) probably do need to cut rates sooner than the others," Zahn told Reuters, referring to other major central banks.

"The UK economy is doing worse so we actually have an overweight to UK fixed income in our European accounts, which is unusual - we don't normally do that."

Zahn manages roughly six billion euros ($6.46 billion) worth of assets at the $1.5 trillion asset manager.

Six of nine BoE rates setters opted to keep rates on hold last week, saying their two-year campaign of higher borrowing costs was having an impact, while one voted for a rate cut.

"The UK economy has continued to disappoint, inflation is coming down quickly and the economy is more responsive to rate hikes, and rate cuts, than Europe or the U.S.," Zahn said, noting that recent rate hikes would soon start dragging on the economy even more.

"Therefore the central bank should be able to cut rates fairly soon, I wouldn't be shocked if they cut in the next 2-3 months."

Money markets expect the first BoE rate cut in June, and a total of 75 basis points worth of cuts by year-end.

The BoE was the first major central bank to start raising interest rates in late 2021. Inflation in Britain fell sharply in recent months and is no longer an outlier among the world's big rich economies.

($1 = 0.9288 euros) (Reporting by Dhara Ranasinghe; editing by Yoruk Bahceli)