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They're still very strong league contenders all they need to do is put their heads together as team and look for a possible solution to put them on track again, and I believe Pep would be working on a game plan currently to put his team in other and not allow their 2 consecutive defeats in the EPL to affect them mentally, well it's a good thing that one of their key player who got booked with will be returning to the team again after the international break after serving his 3 match ban.
Pep Guardiola really misses Rodri, he's very impressive in his position and finding a suitable replacement is not something easy for Pep Guardiola and hopefully he'll come back from the international break in a good shape to help his team defeat Brighton in their next match,well City needs to sit up cause the competition this season is more tougher than the previous.
As the defending champion for 3 consecutive seasons, I think what you say is correct. Manchester City is still the favorite to win the title this season and they definitely have plans to defend their title. Other teams such as Arsenal, Tottenham and Liverpool are challengers and of course have the opportunity to stop Manchester City's dominance if Pep Guardiola fails to get his team on the right track.
Manchester City's defeat in the last two matches can of course give the impression that Manchester City's title chances this season will never be the same as last season. However, I believe that if Manchester City can return to leading the standings, then other teams will be very difficult to stop again. We already know how strong Manchester City have been in the last 3 seasons, so I wouldn't doubt them just because of two defeats.