Pep Guardiola have been a great manager because he transformed Manchester City from grass to grace. He has proven himself to be the best coach who have coached in three different league and he has done a very good job in does places. I think they are in talks regarding his contract extension and I pretty sure it will work out but not as long as the previous contract, I even see something like months not years. Ronaldo Nazario the Brazilian legend is also planning to take him as a head coach in the national team after he have succeed in becoming the head of his country football federation. This is also a great opportunity for him to rest after working the all day for many years.
Pep Guardiola may wants to stay at Manchester city for some more time like a season or 2, but I think the interest from Brasil may disrupt this plan. Pep has proven his worth already in the La liga, Bundesliga and Premier league, moving to Brasil will be a much different challenge and if he can bring the Brazilian's team back to winning ways of trophy, notably, the world cup, then he will set himself more as the very best. Pep may the seriously move to Brasil since, they have enough quality squad he can work with to produce much better result for the team.
I have listened to an interview of Pep Guardiola where he admitted that he has an interest of trying out his career with a national team. There is no doubt that Pep Guardiola is an exceptional coach, one of the best that have existed. He got a good career in Germany also in Spain and now in England. He got the Super Cup, the Champions League, the English Premier League, the La Liga and Bundesliga. So, there's no more exploits for him rather than win with countries.
Pep would have stayed longer with City, but this will not happen if he continues to have bad results in Manchester city or his good players continue to be unavailable. It will force him to leave.