After the defeat on Saturday, City are now 14 points behind title rivals Liverpool.
But now the Champions League is a major priority and Guardiola is still concerned his team is not yet good enough against top clubs like Barcelona, Juventus and others.
“United had the quality to mount a tough defence and their power on counter attacks are exceptional but you just have to accept that,” said The Spaniard.
"However, such is the level we face against the likes of Liverpool, Madrid, United Juventus and are the kind of clubs we need to fight with and the fact of the matter is possibly we are not capable presently to rival them.
"Perhaps we have to live that as a club to improve, to acknowledge the truth now and improve."
"We need to continue battling until the end," Guardiola proceeded.
"Obviously, they [Liverpool] are solid. Presently it is troublesome yet we need to continue attempting.
"We are the start of December and we have different rivalries to play and different games to battle and enhance that and possibly it will help us for what's to come."
However, despite their unimpressive start to the new season, Guardiola has no plans to change the club's approach.