A 2-1 defeat saw Liverpool’s lead at the top of the table reduced to four points as City reclaimed second spot from Tottenham Hotspur, Reuters reported.
“Liverpool are in great shape,” Souness told Sky Sports. “Ask both managers what position you’d rather be in right now.
“You’re going to take the four points sitting top of the league, especially with the run-in that Liverpool have.”
Having played Arsenal and City back-to-back, Juergen Klopp’s Liverpool does not play another top six side until February 24 when it travels to Manchester United.
Carragher also echoed Souness’ sentiments and alluded to Liverpool’s recent form against teams outside the top six.
“The form they have shown, certainly against sides outside the top six, they have got a lot of those games coming,” the former defender said.
“Four points clear is still a really good position to be in. Liverpool just need to relax, get some wins under their belt, maybe improve that lead if they can over the next month to six weeks.”
Liverpool next plays Wolverhampton Wanderers at Molineux in the third round of the FA Cup on Monday.
Pep Guardiola, meanwhile, saluted an "outstanding" Manchester City performance to keep the champion in touch with Liverpool.
"The game was a real game for both sides, we beat an incredible team," Guardiola told Sky Sports.
"We were outstanding from the first minute. We are happy for this victory to reduce the gap. Everything is open.
"Liverpool don't concede goals, and we scored two. We played with courage, so aggressive in our pressing. They are incredibly fast in behind, so dangerous.
"If we lost today it is almost done, it would be so difficult. But we are four points behind them and they are the leaders. We have to fight a lot, but this gives us a lot of confidence."
Guardiola singled out several individual performances for praise, adding, "Everyone was outstanding.
"We don't have a left-back. Huge compliments to Aymeric Laporte against these strikers.
"We need Sergio Aguero in these games, his quality makes the difference. To win these games, he has done it all his career and his finish was incredible."