iWatch Wont Pair With New iPhone 7

Yesterday I received a replacement iPhone 7 due to a hardware issue. I’d forgotten to unpair my iWatch from the old phone and now Im not able to pair the watch with the new phone.

Whether i I try to pair with the camera or manually, I receive a message that the phones software needs to be updated prior to pairing (which I did & took roughly 12hrs, but was nonsense cuz the phone is brand new). But I still receive the same error message.

It it appears as if this is some sort of security measure to prevent from being paired. How do I get rid of this and pair with my phone, por favor!

Yes, I’ve read some of the other threads...I cannot go to My Phone because the phones not paired.