They are currently performing slightly better than Manchester City's performance, but I still feel that their performance is not enough to do well in a tournament like the Champions League. Manchester City and Liverpool are not the favorites for the Champions League this season, but these are the teams we have talked about the most in other seasons. Manchester City management may not have realized that Manchester City performance will be so bad all of a sudden. Sometimes injuries to some players and some players leaving the club have a bad effect on the club. Manchester City need to improve their performance and perform better in their upcoming Champions League matches. If they can improve their performance then maybe they can finish the season in good position of Champions League.
Manchester City is not favorite for this year's UEFA Champions League but I think Liverpool is a favorite team for this year's UEFA Champions League. You said that Manchester City and Liverpool are not favorites for the Champions League, maybe that is wrong. Because everyone probably knows how well Liverpool have performed at the moment and they are probably the best team in the Champions League.
However, Manchester City is performing much worse than Liverpool. Some important players of this team are not in good form and also some players are injured, so the recent performance of this team is not favorable at all. According to the statistics of Manchester City's matches in the UEFA Champions League at the moment, they have won only two matches. Maybe Manchester City will face the powerful PSG club in their next match.
In this year's Champions League, I consider Liverpool, Barcelona, Munich and Real Madrid as favorites. Manchester City's performance is still quite weak and irregular. It is very unlikely that this team will be able to perform well in the Champions League. Manchester City's performance is not consistent.
Real Madrid was not in good form at the beginning of the season. However, Real Madrid is quite strong at the moment. The top spot in the La Liga table is occupied by Madrid. There are several weaknesses in Madrid's squad. Even so, I think Real Madrid is the favorite in this year's Champions League. On the other hand, Barcelona and Liverpool are in good form in the Champions League. So these two teams should naturally be considered favorites.