City have made a stunning start under Guardiola and following the 2-1 triumph over rivals Manchester United on Saturday, the Citizens currently hold top spot in the Premier League table after four matches.
Despite the stunning start though, Guardiola is not fully satisfied with his team's performances so far this season and has urged them to improve in the upcoming Champions League opener against Borussia Monchengladbach on Tuesday night.
Guardiola said: "Until now, in the Premier League it has been okay. But to compete against the best clubs in Europe, in this moment with the way we are playing, we are not able to.
"We have played part of most of the games at a high level, and of course we have to continue. If you ask me whether we are ready to compete in Europe, we are not ready.
"We create, but in front we need more. But it is just two months together, so we have time to get better."