Notification: setting up for a family member requires a GPS cellular Apple Watch x or later that is running watch os 7.0 or later

I believe I have found a way around this as I was hunting around myself for setting up my wife's Applewatch and found no solutions to the message: Notification: setting up for a family member requires a GPS cellular Apple Watch x or later that is running watch os 7.0 or later.

This is what worked for me.

When you get to the prompt set up for myself or family member.

Choose for myself.

It will then pair with your iphone and download the missing update onto the phone.

Once that is complete, it will push it on to the watch and install and you will get the message 'Paired' and the installation is complete.

Note this process will take a couple of hours but it works.

You can then remove the watch from your phone and re-add for a family member as intended.

Hope this helps someone ;-)