Even if Manchester City lost 4-2 to PSG in the Champions League, but Manchester City is the favorite to win its home game against Chelsea. Manchester City have had good form in the Premier League in recent games and that will benefit them, but a poor performance in the Champions League will likely have a negative impact on the team's morale when they meet Chelsea this week.
I suspect the match will end in a draw even though City has a high probability of winning. But if you look at probability, Manchester City's win is more likely to be expected rather than losing or drawing. Chelsea and City will try their best to win 3 points, but it's true, the result of this match is very difficult to predict.
The defeat in the UCL will certainly have a little impact on the mentality of the players when facing Chelsea later. Because after all Chelsea can be a deadly opponent when they are in the match later. The positive results obtained by Man City lately are not yet a guarantee of getting full points and in my opinion BTTS is the most comfortable choice to get perfect results because both teams will definitely score.
But the chance of a draw can also occur because both teams want to get full points to get the best position. So sharing points might be the best thing for both teams. So I might take a bigger risk to get higher odds and bet as you predicted to choose a draw.