Jurgen Klopp's side were the big winners, opening up a two point lead over Arsenal, with City a further point back, with nine games left to play in the three-way title race. City were unable to find a way past Arsenal's defence and had to settle for a point, which means Klopp can end his Anfield reign with the title if Liverpool win their remaining games.
Asked if Liverpool were now favourites to lift the title, Guardiola said: “Yes. First is always favourite, second is Arsenal and we're third. It’s not in our hands. Aston Villa is the next game, so try to win it. It’s simple.
"We take the point. We tried. We didn't create much, they didn't create much. They defended very compactly and had a lot of quality and physicality. As a team, we’re still there.
"We could have more in some aspects, but I’m satisfied. I told the team 'don’t be sad'. You have to give credit to Arsenal for the things they do. Maybe we miss a little it in the final third but it is not easy.
"The last game at the Emirates was quite similar. We tried to create a little more but it is not easy. They are fantastic at what they do and that is why they were top of the league, now it is Liverpool. They played well all of last season and this season."
Bernardo Silva played all 90 minutes on the right wing for City, though struggled to create many chances of note. He revealed that Arsenal had changed tactics from their last trip to the Etihad, which made life difficult for the hosts.
Manchester City failed to break down Arsenal on Sunday
"Last April they went man to man for the whole game and when you do that it's a bit of a 50-50. Today it was a different Arsenal team, more experience. They have young players that are now one year more experienced," he told Sky Sports.
"They felt what it was to play here last season and today they were much better. A lot can happen. Now we don't depend on ourselves, we depend on Liverpool and Arsenal now, because we don't play against them again.
"So we need them to drop points as well as do our job and win our own games. We played against a top, top team. Very organised, very competitive, high rhythm. It could have gone both ways, to be honest.
"That is how I felt on the pitch. I think we started better but during the game they were very good as well, very organised. We had more possession, more control I felt, but they were always dangerous.
"Tough to play against them because man-to-man when they were pressing high, defending low, their wingers were playing as full-backs almost in a line of six. Two completely different games, and they were very well organised. It wasn’t easy to create chances for our strikers to score goals."
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