Six successive victories in the league heading into the New Year had Newcastle cemented in the top four but they have won only one of their last seven games and are struggling for goals.
After finishing 11th last season, Eddie Howe's side are now four points behind fourth-placed Tottenham Hotspur with two games in hand. City are second, five points off leaders Arsenal.
"They have not been here (at the top) a long time, always you think they need time, but they've done exceptional recruitment," Guardiola told reporters ahead of a City's home game against Newcastle on Saturday.
"They've signed experienced players, exactly what they need, they have a manager with huge quality, maybe they were a surprise but not anymore. I think they'll stay there.
"They are one of the toughest opponents we have until the end of the season, in terms of experience, threat, transitions, set pieces - they are the best team in the league. Many, many things. That is why they have been there all season."
Guardiola also provided an update on defenders John Stones (28) and Aymeric Laporte (28), as well as goalkeeper Stefan Ortega (30), saying the trio have "trained, and they feel better, much better."
The Spaniard also heaped praise on Burnley, who City face in the FA Cup quarter-finals, adding that the Championship leaders' boss Vincent Kompany (36) is destined to one day become City manager.
Former City captain Kompany played under Guardiola from 2016-19 before leaving to join Anderlecht as player-manager.
"The consistency they are showing is unbelievable. They are close to being promoted. I am delighted to see his success," Guardiola said.
"He will be back sooner or later. His destiny to be Man City boss is written in the stars. It is going to happen, I don't know when but it is going to happen. We have a chance to reach Wembley, we will compete against Vinny and his team."