The Spaniard is said to be holding off on signing until he has won a trophy with the club. A feat he could well achieve on Sunday when City go toe-to-toe with Arsenal in the Carabao Cup Final.
Pep's new deal is estimated to be worth around £20 million a year - a £3 million a year increase on his current contract which is set to expire at the end of next season.
This season, Guardiola's side have been in tremendous form, winning 36 of 42 games played and only losing on three occassions. Despite being knocked out of the FA Cup in a shock defeat to Wigan, City are cruising to Premier League glory and are still in the running for the Champions League.