Pep's probably staying in Manchester City until 2027. He's not only getting one year contract extension, but there is also an option to add another year. He's probably getting two year extension from Manchester City.
No matter how long the contract is, I believe this man is tired of winning, he has everything a coach would want. Breaking records and setting a new one has been his thing and in the EPL he changed the way every manager thinks, take a look at how every club wants to play like City, all thanks to Pep Guardiola. If Pep Guardiola leaves the EPL I don't think the Citizens will ever be the same or even be that competitive and to top it all some of the players might even leave the team, like it will be very hard to be up to that standard Pep Guardiola have set before leaving the club, that's for any manager that's taking over.
The contract extension will certainly have an impact on improving the team performance, and will clearly make the competition for trophies even more competitive. Manchester City competitors certainly hope that Pep Guardiola will soon leave the Etihad, so that their steps to win trophies will be easier. At club level, Pep Guardiola has won almost all trophies during his managerial career, perhaps one day we will all see him become the manager of the National Team, that is a new challenge for him. It is not easy to find a suitable replacement, throughout its history, the Pep Guardiola era was Manchester City best period.