new watch won't pair

I can't pair my new Apple watch 8 with my iPhone 12. When I try to pair U get to, "a software update is available for this apple watch." When I choose update now, it hangs for a moment then goes back to the first screen. When I choose skip update and continue, it goes to. "set up phone," then wrist preference, then it unpairs and I'm back to the first screen.

There is a long message that pops on for a second, too fast for me to read. I think it says update apple watch. I don't know how to update my watch. In the watch app, when I choose, "my watch," the screen is the same with the addition of a "start pairing," button. Tutorials say that I should choose, "all watches," but I never get that option.

Phone has iOS 15.7, wifi and bluetooth on, both devices have been restarted. Tried pairing manually with the same results. I'm out of things to try. Help? What am I missing?\\

Thanks!