I have been facing this issue since WatchOS 7.0.2 was released and I updated my phone to iOS 14.
I followed many of the steps included below but not limited to:
Hard reset of watch (Series 3 42mm aluminum non-cellular)
Hard reset if phone (X)
Deleting all data on watch
Deleting watch app
Resetting network settings
Switching to a 2.4 GHz network
What finally fixed it for me was taking the watch off the charger and putting it on my wrist. I believe before the update I had a message saying there was not enough space to download the update, but I cannot be sure. Deleting all data may or not be necessary, but try putting it on your wrist.