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.
One theory about Manchester City and Pep Guardiola is maybe he will leave Manchester City because he wants to have people remember him for his good performance and that's why he prefers to leave the team when they have a bad performance this way he will say in memory a legend and the other theory is he likes to stay in Manchester City because he enjoys it and that's why prefers to hire some other players get the team improved and then he will prove himself. I think the second theory is true and Manchester City will even try to give Guardiola some more time even if he gets bad results.