The Irish province emerged victorious as they ground out a 15-9 verdict over the Aviva Premiership side at Thomond Park last weekend.
The result puts the two sides level on 10 points, just two adrift of Racing Metro who lead Pool One after their win over Edinburgh on Friday night.
Whoever emerges triumphant in Watford will move to the top of the standings and have their destiny in their own hands ahead of the conclusion of the pool stages next month.
Saracens boss Mark McCall has called on his side to rectify an abject performance in last Saturday's encounter.
And New Zealander Penney is predicting another torrid confrontation.
"I think they'll be very tough at home this week. They've a lot of pride and they'll be determined not to let something like that happen to them again," he told a press conference.
"But we're improving and building confidence. There'll be fireworks.
"Every week we are making a bit of progress, tangible progress.
"The belief thing comes with a bit of success, having the results go your way, and that's all adding to the well. We are not out of the pit, but we are on the upwards curve."
Munster have Casey Laulala in the centre after Keith Earls was ruled out by a groin injury, while Owen Farrell moves to fly-half for Saracens with Richard Wigglesworth, Joel Tomkins, Dave Strettle and George Kruis also starting.
In Pool Six, Sale face the unenviable task of travelling to face star-studded Toulon.
The French club are favourites to progress having won all three of their games to date, including their hard-fought win over the Sharks last time out.
New Sharks director of rugby John Mitchell was pleased by the effort shown by the Aviva Premiership's bottom club when they hosted the Top 14 giants, and wants to see more of the same this time out.
"We're looking for further improvement from last weekend. Obviously Toulon are very experienced and they are at home so that will create an extra challenge for our side," he told a press conference.
"But I'm very much wanting to see further growth in our game. We managed to largely shut them down last week but we didn't get enough possession to create pressure of our own.
"It's another privileged opportunity for our players to play against a side like Toulon. Their squad is probably worth about six times what we are in terms of cost and they have icons all over the field.
"It's an exciting opportunity but we're focusing on further improving our ability to stay in the contest and not get frustrated.
"The priority this week is about getting the right performance and above all I want us to take another step forward rather than going backwards."
Sunday's other fixture sees Glasgow travel to face Castres in Pool Four looking to record a first Scottish win in this season's competition.
The Warriors and Edinburgh have suffered seven defeats out of seven so far.
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