Liverpool won the Premier League title for the first time since 1990 in style, finishing 18 points clear of nearest rivals Manchester City this season.
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Jurgen Klopp's side also won the Champions League, UEFA Super Cup and the FIFA Club World Cup last season.
"Yes, by a big margin, the toughest rival I have faced in my career was the Liverpool team of last year and this season," Guardiola told DAZN Spain.
"It dominates all the records. If you allow them to dominate you, they will cage you in the area and you don't come out. When you dominate them, they run finding spaces like no one else does.
"They are very fast at going back. They are very strong in terms of strategy. Their players are mentally very strong. It's the rival that I've had to think more about how to beat them.
"If you ask me which team I've had more difficulty to decipher and deal with, that's Liverpool. The first few years when I arrive to England, Liverpool was a little smaller than it is now and Real Madrid was much stronger. Now, this Liverpool is the toughest that I've encountered in my career as coach."
City host La Liga champions Real Madrid on Aug. 7, holding a 2-1 advantage from their Champions League round-of-16 first leg.
"It's a very strong team, in every sense and historically of course," Guardiola said.
"It has made me a better coach. With Jose Mourinho, with [Manuel] Pellegrini, with all the coaches they have had. They [Real Madrid] have done what they have done, to win three straight Champions League, to have taken away two La Liga titles from Barcelona when Barca had completely dominated this competition in this decade like no one else had done."
Guardiola added that he has a great respect for Real Madrid coach Zinedine Zidane.
"I admire the two versions, that of the player and the coach," the former Barcelona star said.
"The two. I think Zidane as a player was wow. I would have liked to have played with him. I had the misfortune to have to come up against him facing the French National team.
"He does well for football, in the good and bad times and I'm happy about that. I'm very happy that things are going well for him because people like him are very good for football."
Guardiola steered Barcelona to two Champions League titles but was unable to lead his former club Bayern Munich and City to glory in Europe's elite club competition.
"They ask me what am I going to feel to win something that I haven't won [at City]," Guardiola said. "I don't know. I don't know what I'm going to feel. I honestly tried the first year, and the second and the third and the fourth and in all the years that I'm here. If there is a chance, I will try to win it. But if I don't, will I have failed? I will have failed but the important thing is to try."