Well, defeat is a defeat regardless of which competition it occurs. Although,I don't have to blame Pep or the players for what Manchester city is passing through now. We all know the reason and cause for their recent abysmal. Things were not like this when their squad is complete and opposite performance is expected when key players are absent from the squad. No matter the experience of the couch, there is absolutely nothing to do when a team is hit with injuries other than decline performance.
On the other hand, I do expect a lot from them in the UCL. Premier league is a home league and Manchester city have won the league as many times as possible. Moreover, they're simply the best team in English league now. Premier league is believed to be more competitive than any other league in Europe, so why not expecting Manchester city to do well in the UCL? They're better compared to other teams playing the UCL but the same injuries affecting them in the local league is dealing with them in other competitions.
Every team must have experienced that phase and what Manchester City is experiencing right now is normal, I think even last season they have experienced something like this, especially now with many of Manchester City's main players being injured, of course their performance has dropped drastically.
This season is still quite long, so Pep still has a lot of time to fix Manchester City's performance, from what happened last season I think Pep can also solve the problems this season.
Don't overestimate Manchester City's current decline in performance, it's normal and they are still favored to win the Premier League title and also the Champions League.