Upgrading to newer phone and newer apple watch

The Apple Watch creates a backup, that is part of the iPhone backup, if you unpair the Apple Watch from your iPhone.

So, if you unpair the watch from the old iPhone the data will be saved on the old iPhone, if the iPhone is backed up itself.

I would unpair the watch, create a backup of the old iPhone, set up the new iPhone from the backup of the old iPhone and finally pair the new Apple Watch to the new iPhone and use the backup of the old Apple Watch to restore from.

Unpair and erase your Apple Watch - Apple Support

Set up your Apple Watch - Apple Support

kb1ll wrote:

I was thinking of just setting up the new iphone using "quick start data transfer", then setting up the new watch on the new iphone (saw video where you can replace the old watch on the new phone. This sounds simpler but I want to do it right. Thoughts?

Yes, Quick Start should do what you want. However..... Make sure you have a back up of both devices nonetheless. When I got my new iPhone, Quick Start stalled out and I had to finish by loading a back up. I probably could have tried Quick Start all over again but the eSIM had already transferred and I didn't feel like figuring it out.

Use Quick Start to transfer data to a new iPhone or iPad - Apple Support

Yes, QuickStart is an easy way to pair devices like an Apple Watch to your iPhone, but when it comes to transferring data from an old iPhone to a new one, I prefer restoring from a backup I created in iCloud or on my Mac.