Last year Real Madrid was not a favored team to win UCL but somehow they were able to beat Chelsea and even Man City as the strongest candidate to win the cup. It's unfair to judge that Real Madrid couldn't win UCL just because of their poor performance in LaLiga. In otherwise, Barcelona playing well in LaLiga yet they couldnt did anything in Europe competitions.
Real Madrid squad last season and this season relatively no big changes in their team so I believe that real madrid still have a pretty good rally in the Champions league arena. For this season, they have a little weakness in Laliga, but in the Champions League, when they face Liverpool, they have shown their quality as the defending champions, which makes them the strongest candidate this season.
between Barcelona and Real Madrid they have a strong difference in the team's progress so far because barcelona had a smooth road in Laliga but real madrid was able to do better in the Champions league.