Disconnect the watch from the phone, turn on WiFi on the watch, go to settings on the watch go to updates and run the update Directly from the watch and it will update without a problem, after it's done you can reconnect the watch to the phone
Thank you for your Feedback.
Please let us know if you are unable to update your watch after 24 hours.
We appreciate your contribution to the Beta community.
One UI Beta Team
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