City received an offer from Arsenal on the final day of the transfer window that would have seen Sterling move to the Emirates as part of a deal for Alexis Sanchez.
But Guardiola says he refused to let the winger go and was only every interested in a straight offer for the Chilean.
“No, it is simple,” he said. “When we started to speak with Arsenal in the last days before it was not impossible, they wanted to make a swap with Raz. And they talked to me and I said ‘no chance, ‘zero chance, not one per cent chance’ to take a swap deal with Alexis because I have a lot of trust in Raz.
“He is 22 years old, an English player and he has a lot of scope to improve.
“So, the only thing we can do if possible is to do try and do a deal with cash and we tried to make an offer that they would accept but in the end, they could not sign the player they wanted and Alexis stayed with Arsenal.”
Asked if he would reignite his interest in Sanchez in January, Guardiola said: “We will see in the future.
“Before the transfer window ends, we were concerned how best to improve the team. But when it closes, it’s over for me and I am not thinking about January or the end of the season.
“We will see next time. Right now, we have our guys who will travel together until he end of the season and we will see.
“I don’t know what is going to happen in the winter time and next season.
“He is an Arsenal player. Obviously, we were interested in him, at the end Arsenal decide not to sell him.
“All the best to Alexis. I know him from Barcelona and that’s all. Sometimes deals work, sometimes not.”
Meanwhile, Guardiola says he expects Liverpool to challenge for the Premier League title this season.
The Merseysiders arrive at the Etihad Stadium on Saturday in fine form having taken seven points from a possible nine so far this term, including a superb 4-0 win over Arsenal in their last match before the international break.
Guardiola says he admires the style of football Jurgen Klopp has encouraged and believes Liverpool will be in the title shakeup come May.
“Liverpool always have been and always will be [title challengers],” he said.
“Liverpool is with [Manchester] United the most successful team in England Europe. Even though they didn’t win the league for a long time, they are always outsiders, no doubt about that.
“I know how tough Liverpool will be. I’m sure it is going to be a very good game.
“Jurgen normally manages really good teams. They are good in the transitions, really quick, they play with a lot of intensity and it doesn’t matter if we are favourites or not.
“I’m sure it is going to be a really good game.”