Kenny Dalglish's appointment has ended the rumour mill for the moment.
Coyle believes his fellow Scot is well-suited to the Anfield job, almost 20 years after abdicating in the wake of a thrilling 4-4 derby draw with Everton.
Coyle said: "Roy Hodgson won the manager of the year award last year - he's a fantastic manager. He'll show again he's a fantastic manager, so I'm disappointed for Roy. Kenny I know well. He's a fantastic man and his knowledge of football speaks for itself."