On your iPhone tap Settings > General > Reset > Reset All Settings
No data or media will be deleted but settings will be restored to factory default.
It can take a few minutes for the reset process. When it's done tap Settings > General > Date & Time then make sure: Set Automatically is toggled ON.
A reset will not un pair your Apple Watch. Use it like you normally do.
" I tried restoring the watch to an old backup with the previous watch os and the problem persists"
If resetting does not help, there may be something in that backup that is causing a conflict. At this point you may need to restore the iPhone to factory settings > Use iTunes on your Mac or PC to restore your iPhone, iPad, or iPod to factory settings
If you do this you will have to re "pair' the Apple Watch > Set up your Apple Watch