Watford go into Tuesday's match against the Premier League champions without a win in four league fixtures but Gracia refuses to be daunted by the challenge of facing their unbeaten opponents.
"Everybody knows they are the leaders. The best team in England and in Europe as well - one of the best if not the best," Gracia said.
"It will be a very demanding game. We know that but we have our options, we are going to try and we know playing at home we are able to beat all the teams."