It makes sense, Manchester also started to take steps to find a new coach who can replace Guardiola. So far, according to my knowledge, both parties have not reached an agreement to extend his contract, perhaps the reason is because Guardiola wants to find a new challenge with the National team. This season, Guardiola has had a little difficulty in formulating a strategy because several key players have been injured, as a result, Manchester City performance has started to decline. If he fails to retain the EPL title, he should at least be able to get Manchester City to finish in the top four and that would not be a bad achievement for him.
Manchester City has been built by Pep Guardiola in the last few seasons with a fairly strong team framework, so even though Pep leaves at the end of the season, there is a legacy left behind and it is possible for the Manchester City team to remain strong.
Yea, why not? Manchester city will still remain strong, or have you forgotten that Manchester city was already strong before he arrives at the club?
Though they aren't as dominant as the are now in the past four seasons but they were very very good, because when Mancini and Pellegrini was the manager of Manchester city, they both won the league and Pellegrini did it convincingly and in an emphatic fashion, so I believe that regardless of if he stays or he goes, Manchester city will still be a dominant force in the English premier league because of the star player at the club.
Then as for pep guardiola future at the club, though nothing is certain, but I believe that he might stay put, because Manchester city is the only club he has managed that has given him everything he wanted as a coach, when it comes to resources available to him, and I believe that due to how relax and ok he is in England, he might extend his contract at the club further, let's just watch and see how things plays out on his future.