When Crystal Palace visit Anfield in a couple of weeks Roy Hodgson will doubtless be reminded of his pre-Christmas remark – a slightly tactless one for a former Liverpool manager – that a four-point gap at the top of the table was nothing for Pep Guardiola to worry about.

That may still be the case, with 17 rather than 20 games left, though what Guardiola would really appreciate from Hodgson is the sort of Palace display against Liverpool that took the points at the Etihad and spooked Manchester City to such an extent they went on to lose their next game against Leicester.

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No one was expecting that; City suddenly falling to back-to-back defeats against sides outside the top six amounted to the sort of vulnerability it was imagined had been abolished at the Etihad, even after the first setback of the season at Chelsea. The knock-on effect was considerable, with Tottenham rediscovering their propensity for bottling it on the big stage when they woke up to find themselves Liverpool’s main title rivals, and Jürgen Klopp having to insist after beating Arsenal that a double-digit lead over the defending champions at the end of December was not necessarily an occasion for putting out bunting.

So it has proved by early January, a game in hand and a head-to‑head victory having brought City right back into the picture. The question for the rest of the league season is which City we are going to see, working on the assumption that Liverpool will remain fairly consistent. That may seem a large assumption to make but to get to where they are at the moment Liverpool have improved by 13 points on where they were at this stage of last season, whereas City were still unbeaten in the league after 21 games 12 months ago and consequently nine points better off than they are now. Klopp claims Liverpool this season have not yet been seen at their best, and he may be right, though they are regularly playing and picking up points in the manner he demands. While they may still be a work in progress, not quite the finished article, Liverpool are recognisably a Klopp team now and unlikely to react to their first defeat of the season by departing from the script and losing a couple more of their upcoming games.

That is what City did, and that is why all the pre-Christmas predictions of a relentless march to the title and a team close to perfection have had to be hastily revised. Even when keeping the title race alive by beating Liverpool in the last game, City displayed some most un-Guardiola-like characteristics, using a centre-half at left-back and bringing in Vincent Kompany to lead a back-line determined to give the ball some welly.

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On the positive side Guardiola set out his stall to match Liverpool’s spirit and physical intensity and achieved a notable victory. To be slightly more critical, City would have been in trouble had Kompany been dismissed for his lunge on Mohamed Salah, as he certainly could have been. City have not been noted in the Guardiola years for physical intensity and, though it brought a result in an important game, it was slightly odd to see the manager adapt his principles so significantly. Kompany, for instance, had not started a game against top-six opponents since last season. For a coach fond of preaching the virtues of stability this was close to chopping and changing, even if he was fully vindicated by the win.

So it should be interesting, to say the least, to see how Guardiola approaches the rest of the season. It has been pointed out that most of his titles in other leagues have been processions rather than fights, with peak Barcelona and Bayern Munich rarely having to come from behind, though the City manager has just answered any critics who thought he might shrink from confrontation.

Klopp, on the other hand, may not need to alter his approach too much. If there were a few problems in defence on Thursday it was because players such as Sergio Agüero, Leroy Sané and Raheem Sterling are good enough to ask questions of most defences. Liverpool do not have to play City every week and, when they face less stellar opponents, the chances are that Salah and Roberto Firmino will shine again and Virgil van Dijk will return to being imperious in defence. That is the theory, anyway, though one can readily understand Liverpool supporters feeling anxious until upcoming fixtures against bogey teams in Palace and Leicester are out of the way.

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While this might turn into the closest title race for several years it is worth bearing in mind that it will not take place in isolation. Both City and Liverpool will be involved in the knockout rounds of the Champions League from February onwards, both have FA Cup third-round games this long weekend and City will shortly have a Carabao Cup semi-final to deal with. Fighting on all fronts is a high-risk strategy, though City have the squad for it, particularly when Kevin De Bruyne makes a full return from injury.

Klopp is already being implored by some Liverpool fans to give his youths and reserves an outing at Wolves in Monday’s Cup tie, yet inevitably Europe will cast the biggest shadow over the title race. José Mourinho used to maintain that reaching the last eight of the Champions League was the minimum requirement for any club wishing to regard itself as a big player in Europe and for differing reasons City and Liverpool will probably want to go further than that.

Guardiola is aware the City hierarchy view success in Europe as the ultimate goal, even if many others at the club would gladly swap it at this point for another domestic title. Liverpool have been seen at their best and worst in Europe this season but appear incapable of taking the challenge lightly, even with the possibility of a first title in 29 years on the horizon. Liverpool fans, in particular, might feel it is worth sacrificing everything to concentrate on league progress for the rest of this season, though in reality that is usually much easier said than done and the chances of ending up with nothing are high.

First things first, though: now we know how quickly a 10-point gap can erode, the next instalment of rare and welcome excitement at the top of the Premier League revolves around seeing whether a four‑point lead will last to the middle of next month.