Arsenal have a five-point lead at the summit but champions City have two games in hand and victory would see the initiative switch firmly their way.
It is really important but not decisive.— Pep Guardiola
Momentum already appears to be with City, who have won their last six games while the Gunners have been held to three successive draws.
“It is really important, but not decisive because there are still many tough games for both sides,” Guardiola said at a press conference.
“We have more tough games to play but we cannot deny how important it is.”
City were inconsistent during the first half of the season while Arsenal accumulated a club-record 50 points in their first 19 games.
Guardiola claims he could not have imagined at that stage that his side would end the season going head to head with Mikel Arteta’s team.
He said: “It’s really good to be here. After the first round of the Premier League Arsenal did, it was difficult to think we would be here in that moment.
“It is a really, really important game because we could get points and our biggest opponent this season cannot.
“Our focus is on what we have to do. We’ve played two times this season, in the FA Cup and there, and they were really, really tight games and really, really difficult.”
Guardiola has been impressed by the development of Arsenal under his friend and former assistant Arteta.
Arteta left his role on Guardiola’s coaching team to take over at the Emirates Stadium in 2019.
Guardiola said: “I was watching Arsenal with Arsene Wenger and they always had incredible details and care for the ball, and all the players they selected to play had the biggest quality, biggest skills.
“But I think Mikel has brought them another dimension. They are huge competitors in all senses, so aggressive. In the two games we played this season we felt it. It will be very difficult.”
Arsenal finished fifth last season and have been improved greatly by the addition of two former City players in Oleksandr Zinchenko and Gabriel Jesus.
Yet even though they have strengthened a rival, Guardiola insists there are no regrets over the decision to let the pair go.
He said: “The club made the decision they believed they had to take. When this kind of stuff happens it is because the three parties agree. It is not about just one part.
“The players are agreed, the club want to sell, the club want to buy. They agreed and the club took a decision.
“Before you ask the question, ‘Is it a risk?’ – they are happy, we are happy. We don’t have any complaints about Gabriel and Oleks, who they are and what they have done for this club in the last years.”