Hi,
I was able to get it to work by following these steps:
1) pair Watch with another spare iPhone running iOS 13.
2) update Watch to latest stable release( mine was updated to 6.2.8)
3) unpair.
4) pair manually to iOS 14 device ( I had issues pairing with the normal method) by clicking on the i when the image appears on the watch and also click on pair manually on the iPhone.
5) setup as new
this is what worked for me.