The Reds – last season's runners-up behind City – opened up an eight-point lead over Guardiola's men on Saturday with a last-gasp win over Leicester City.
City were unable to bridge that gap at the Etihad Stadium on Sunday, however, with two late Adama Traore goals giving Wolves a surprise, but thoroughly deserved, three points.
The margin of victory could have been even greater had Nuno Espirito Santo's side taken advantage of a host of opportunities handed to them in the first half by City's porous defence.
Guardiola defended his players, however, and believes there is plenty of time left in the campaign for them to claw their way back into contention for a third consecutive Premier League triumph.
"Come on guys, there are a lot of games to go," he told a media conference. "We lost to a good team, who were really organised, so strong in the air and so fast in the counter attack.
"I know these guys [his players]. Still they are incredibly involved and can do it. What happened, happened. Most of the teams who won [the Premier League] in the past, the year after, don't win.
"Today, we were not at our usual level. The previous games were good, but the distance is big. I know that. Liverpool is not dropping points. But we are in October; there is still a lot of games and competitions."
The continued absence of Aymeric Laporte and John Stones meant Guardiola was once again forced into fielding Nicolas Otamendi and midfielder Fernandinho in central defence.
They were caught out on a number of occasions by Wolves' incisive counter-attacking moves, while Otamendi was guilty of a host of misplaced passes and errant challenges throughout the 90 minutes.
Guardiola defended the pair, though, and stated they were not helped by the carelessness of the players in front of them.
"They were quite good," he said. "They suffered because we lost the position in front of them. No central defenders can defend the kind of balls we lose there. They were good."