Pep Guardiola said nerves cost Manchester City in their defeat to Wolves on Sunday, a result that leaves them trailing Premier League leaders Liverpool by eight points heading into the international break. The warning signs were on show early as Wolves failed to capitalise on lax defending and sloppy passing. They eventually made City pay with two late strikes from Adama Traore to seal a famous win at the Etihad Stadium. Guardiola said City's unusually wayward play, rather than their makeshift centre-back pairing of Nicolas Otamendi and Fernandinho, impacted his team's approach. "It was a bad day, sometimes it happens," Guardiola told reporters. "We started quite well and after we conceded two situations in our buildup where it's impossible to defend, we got a little bit nervous. "We controlled them better in the second half but at the end with us attacking and people up front, we lost balls in positions it is so difficult and they were clinical. "Before that we hit the post we had actions but the way we played was not good. It was not a good day, we didn't play good. "Today we were not at our level. We had problems to make our game. We have faced many teams defending deep and found a solution, but not this time." It was a second Premier League defeat in eight games for the two-time defending champions having lost to Norwich City last month while also dropping points to Tottenham Hotspur at home. Liverpool needed a last-gasp penalty to secure a 2-1 win over Leicester City on Saturday to maintain their 100 per cent start to the season. Despite the gap, Guardiola can draw on recent history to know his squad are capable of making up ground. City trailed Jurgen Klopp's side by seven points at the turn of the year before reeling in the Reds, winning their last 14 games to retain the Premier League title by a point. “I know these guys, they can still do it. It was a bad day, a bad game. Credit to the opponent. What’s happened has happened. “Today was the day we were not on our level. The previous games were good. The distance is big, Liverpool have not dropped points. “Now is the time to come back. The results will dictate the situation, but we are in October and there’s a long way to go," he said. German midfielder Ilkay Gundogan conceded City were well below-par. "We are disappointed, we are sad, and we are frustrated. We have to admit that today wasn’t enough which is very unusual for us," he said. "It is what it is and tough to take right now – especially before the international break when you have two weeks. But we have to do better afterwards." “We know we are able to play and we know our qualities but we were not able to put that on the pitch today." Wolves' performance made light of their difficult start to the season and the fact they were in action in the Europa League in Turkey on Thursday night. Their second victory of the campaign lifted them to a healthier-looking 11th in the table heading into the international break. Wolves manager Nuno Espirito Santo said: "I'm very proud. It was a very good performance - but more than the performance was the work the players did. "It is very difficult to play against City because they are so good and move the ball so fast. It requires a lot of high-speed running. The boys worked very hard and that was good."