After Crystal Palace ended City's record-breaking win streak on New Year's Eve, Raheem Sterling scored the fastest goal of theseason to get 2018 started on the right path for the runaway Premier League leaders.
It took the Englishman just 38 seconds to score after he finished off Leroy Sane's teasing cross.
Hornets striker Andre Gray managed to grab a consolation goal with eight minutes remaining in the match.
Speaking after the match, Sky Blues boss Pep Guardiola was pleased with how his side responded to the draw with Palace.
He said: "We played really well. After dropping two points, we spoke about our reaction because big teams drop points but not too much.
"We made five changes from the last game but it's not our fault. I know here in England the show must go on, but that's not normal guys. The big bosses should reflect that.
"We're going to kill the players. The federations don't think about the players but they have to. They play 11 months in a row. They have to protect them and play with quality and not quality. We have to think about the artists. But I know it won't happen.
"Watford scored because they have good players. We will review the action but people can not expect us to win 7-0 every time."