Arteta will be part of Manchester City's coaching team for Wednesday's Carabao Cup clash with Oxford despite being in talks with the Gunners, who have put him at the top of their wanted list.
The Spaniard, who has been an assistant coach at City since Guardiola joined the club in 2016, has emerged as the strong favourite for the vacant managerial post at the Emirates Stadium.
Arteta is continuing to fulfil his duties at City, though, including travelling with the side for the Carabao Cup quarter-final at the Kassam Stadium.
Guardiola has made it clear that he wants Arteta to stay where he is for at least the rest of the season, but the club will not stand in his way and the final decision will be made by him.
Arteta has all the attributes to make it in his own right, something that Arsenal are now well aware off, hence their move to get him on board.
"We were so smart to pick him up and now the other clubs want him," Guardiola said. "I've said many times, he's an incredible person, a good manager, work ethic, that is why he is with us. He's talking with Arsenal so I don't know what is going to happen."
Arsenal's pursuit of their former midfielder became public when Gunners chief executive Vinai Venkatesham was pictured leaving the Spaniard's home in the early hours of Monday morning.
Guardiola said Arteta had told him about the meeting, and that he would not be trying to influence the 37-year-old's decision.
"He knows exactly what we want but at the end it's his decision. It's personal," the City boss added.
"Nobody is here if they don't want to be here. If he wants to be here it is because we decided we want to work together three years ago. What happens now, I don't know."