I’ve removed all possible apps and my iPhone still won’t update

Unpair your Apple Watch via the Watch app on your iPhone.

Then Re-pair your Apple Watch again,this usually frees up

enough storage space to update your watch.And without any loss of data.

Or this;

If you don’t have enough space to update your Apple Watch – Apple Support

Sounds like you're missing room to update your Series 3.

If so, try unpairing your watch from your iPhone then pairing it back to it.