Apple watch update impossible

Hello there!

I haven’t used my Apple Watch for a while (multiple months), and recently my iPhone started to bug me (aka harrass me with pop-up reminders all the time) about available updates for the watch..

I thought, alright I’ll do that and start using the watch again, but seems like I ended up in a forever loop.

My iPhone didn’t recognize the watch anymore — so I reset the watch and started the setup. However, while pairing I have two options - update and continue OR exit and reset watch. Obviously I selected to update, but according to my phone, there are no new updates available - and again, I can either continue update (which already told me there are no updates), or exit and reset the watch...

please help — see screenshots attached of the steps just described.