The 28-year-old’s loan move to the Bundesliga club was confirmed on Tuesday with City and Bayern agreeing a deal that will see Cancelo spend the remainder of the season at the Allianz Arena.
Talking about the decision at his pre-match press conference ahead of Sunday’s Premier League trip to Spurs, the City boss paid tribute to Cancelo’s contribution to City’s success over the past few seasons.
But Guardiola added that Cancelo’s desire for regular game time led to the decision being agreed by both Club and player that the loan move was the right one and he insisted City had more than enough options to cover his departure.
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“First, I wish him the very best. Next season I do not know what is going to happen,” Guardiola said.
“He made incredible figures in the last two Premier Leagues we won.
“After the World Cup, we make a pre-season and decided to play in some patterns a different way.
“And I liked what I watched, and I decide to give more time to the players that I saw on the pitch that I liked. I like that.
“Everyone has their own character and personality. Mine, yours, you, him and he likes to play. He’s one of the players who trains the best. He loves to play.
“In the situation didn’t play much in last two, three games. We cannot say he didn’t play much because in the last few years, he was one of the players who play more minutes, by far.
“But he is a guy who needs to play to be happy. And he decided, we decided together to let him go to Munich.
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“He wants to play every single game and hopefully it will happen in Munich.
"If Bayern Munich want Joao it is because he is beyond an exceptional player.
“So I will not say one bad word about him. I think his work ethic and his love for football and his passion to play football, his quality and skills. What can I say?”
Looking ahead to the rest of the season and City’s selection options at left back, the boss insisted he was happy with his squad.
Guardiola also revealed why the Club didn’t feel the need to go into the market to bring in a replacement in the January window.
Instead, the boss said City would take a considered decision about the best in the summer.
“We can handle the situation with what we have in all departments this season,” Guardiola stressed.
“I trust a lot with the players we have a lot. So, if I had a feeling I would say to my bosses to say ‘oh I think we should do this’.
“When Manuel Akanji happened, so in the transfer window I said ‘I had the feeling that we needed another central defender’ for that reason. Nathan was injured at that time, Ruben injured before that happened. I had the feeling with this opportunity, and we did it.
“In this case, it is completely different.
“It happened one or two days before the transfer window, I am really pleased with squad we have. It’s better have the money in the bank and don’t be criticised to spend more.
“Yes, we talked about that (the transfer market) but it took three minutes discussion (and we decide) OK wait.
“We can go into the market and pay a huge amount of money but this is not the case.
“In the summer we will see.”