If the buyer has agreed to you cancelling, this is good , as you can cancel it and not gain any damaging defects for your account.
If the buyer is in agreement proceed this way:
Click on the item in Orders >> Awaiting Postage. Top left click on View Order details, then on the right from More Actions drop down menu select Cancel this order, selecting the reason ....Buyer Requests to Cancel.
This refunds the buyer, and your seller performance is not affected.
To void and receive a refund for the unused label this link will explain the procedure, you may need to wait 24 hours for the label to show before being able to void it.
Find your label with this link . https://www.ebay.co.uk/ship/lmng/labels-history/seller-hub and to the left of the sales record there...
The refund will take between 5 - 21 days to process.
@martinw691