Guardiola says Man City expect tough FA Cup game at Luton
City, who won their seventh FA Cup by beating Manchester United 2-1 in the final at Wembley last season, visit Kenilworth Road on Tuesday.
They won 2-1 at Luton in the league in December but Guardiola believes the promoted club, who are third from bottom in the standings, are much-improved now.
"It doesn't matter if you are playing a side at the top, bottom or middle of the Premier League. The challenge is to play without fear," Guardiola told reporters.
"They play via direct channels, but they have the ability; they have improved a lot in their build-up play since we played them last. They now play really good with the ball.
"It is a Premier League side away in the FA Cup, I would not expect it to be any different in all my years I have been here in England."
City cut the gap with league leaders Liverpool to one point after a 1-0 win at Bournemouth over the weekend.
Eyeing a fourth successive league title, City are second in the table with 59 points, one more than third-placed Arsenal.
Guardiola said the motivation to maintain their success after a treble-winning campaign remains the same.
"I don't have any doubts that we are going to try. There are just two, two-and-a-half months of the season remaining and we arrive here," the Spaniard added.
"From tomorrow, every game we play is like a final: the decisive part of the season is here, and we are going for it.
"When you play in the last 16 of any competition, we know how difficult it is, but it is a good test to find our rhythm, our mental consistency. To know what we have in the next month, everyone knows what we have to play for."
As City prepare for the title run-in, they have received a boost with winger Jack Grealish and defender Josko Gvardiol closing on a return to action after sustaining injuries.
"We train this afternoon but I think everybody is fine," Guardiola said. "He (Gvardiol) is good, I don't know, but he is training without much pain."