Watch defaults to iPhone speaker not headphone

So for years I have happily listened to music on headphones from my watch. Since ios17 and watchos10 that's all over...

Now, even though the watch shows my headphones are connected, any time I try to listen to music, the watch defaults to playing it through my iPhone. If I click in the top right corner, the only options I get are iPhone, Apple TV and HomePod. My headphones don't appear. If I then go far enough away from the house to be out of range of the iPhone, the watch eventually recognises my headphones and I can use them. Happens whether I'm using Shockz or Sony headphones or AirPods. What am I doing wrong?!