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I’ve updated my iPhone 12 Pro to 14.7.1 and my Apple Watch 6 is running 7.6.1 and I still have trouble unlocking my watch using the phone. I have to try it 6-10 times before it finally unlocks. It’s much quicker just to punch in the 6digit password.
Apple Watch
Turn off "Unlock with Apple Watch" under iPhone settings -> Face ID & Passcode (for touch ID, it may be slightly different title).
This is a bug, and Apple will most likely issue an update in the next few days/weeks.
If you want both, you may be able to do the following dance (assuming you have Face ID; not sure if this will work for Finger Print Reader iPhones):
o iPhone screen blank (screen off)
o Raise Apple Watch until the numeric passcode unlock screen appears.
o Then immediately wake the iPhone and unlock it.
If you wake the iPhone too early, it will not work.
If you wait too long to wake and unlock the iPhone, it will not work.
NOTE: You may find suggestions to Unpair and pair the Apple Watch again. This ONLY appears to work, because that turns off "Unlock with Apple Watch". It a lot of work, to turn off the option you can do yourself in just a few seconds.
Apple Watch still will not unlock with 14.7.1
