Arsenal are in good shape but they also know their limits this season. You're correct, Mikel Arteta should tend to concentrate on EPL other than distracting the team in UCL race. Gunners is yet to face any big team in UCL this season, they meets and records thrilling victory against these average teams. EPL race would become easier and possible for them to win and not elite competitions were there's presence of tough competitive clubs. Winning UEFA Champions League is an impossible task for the Gunners, after been absent in the elite competition for long term.
Maybe this season Mikel Arteta will make a difference to last season where Mikel Arteta will also concentrate on the Champions League apart from continuing to concentrate on the EPL. Although in general I am not sure that Arsenal will progress smoothly to the next round, but for the round of 16 I am still quite confident that Arsenal has a better chance of qualifying. Because in group B there are no big, stronger teams, so it is more possible for Arsenal to qualify for the next round of the Champions League.
Arsenal's performance this season is much better than last season and in Group B there is no strong opponent for Arsenal so I think there is no reason for Arsenal not to qualify from the Group even though they have already suffered their first defeat against Lens in the second match, I think it is not big problem.
Every team will definitely focus on their UCL matches because this is the most prestigious competition in Europe, and in my opinion, with the quality that Arsenal has this season, it is very possible for them to go further in the UCL this season.