Kbase Article of the Week: If Your iPhone Doesn’t Unlock Your Apple Watch After Updating to iOS 14.7 »

For once, a timely support document:

When you have Unlock with iPhone turned on, unlocking your iPhone unlocks your Apple Watch as long as you’re wearing it. An issue in iOS 14.7 affects the ability of iPhone models with Touch ID to unlock Apple Watch.

If you experience this issue, just type the passcode directly on your Apple Watch to unlock it. This is required only one time, as long as you keep your Apple Watch on your wrist. If you forgot your passcode, you need to reset your Apple Watch.

This issue will be addressed in an upcoming software update.