Hey there, Frashid.
This seems like a glitch in connection if the notification is showing up on your iPhone. If it is a connection error, try unpairing the Apple Watch from your iPhone on Bluetooth, then re-pairing and attempting the update again.
If the notification is showing up on your Apple Watch itself, it is most likely some kind of error on the watch software. Try restarting the watch and attempting again.
If it still doesn't work for you, call Apple's support. ( 1 (800) 275 2273)
Good luck!
All the best,
J