I'd have City for both the Premier League and the English team to do best in Europe right now considering what we've seen so far and the champs league draw. Regarding the league I see only Arsenal and Man City as true contenders right now(as much as I'd love Leicester to be there I can't see it unless we're still in the same position come February/March time).
Champions League I can't see anyone but city progressing past this round, Arsenal might be able to nick a draw or one goal win in London but they could just as easily lose by 3 or 4 in Spain. I was at the Leicester Chelsea game the other day and honestly, Willian and Remy aside, much of their team doesn't look up for a premier league game, let alone a game vs a European giant. That said the games are a while away and things can change quickly in football so let's see.
Once again Leicester showed that this myth that more possession means you played better is a mere fallacy, it's the same reason United are struggling right now. Having more of the ball is unimportant compared to how effective and punishing you are with it, and that's what Leicester are showing every week.