Why can't I set up my Apple Watch with iPhone?

I have been trying for hours to set new Apple Watch on my iPhone. It keeps telling me to update iCloud account settings which I tap continue, then it says I must delete icloud data (end to end encryption something). I am only signed into my iCloud on my iPhone and haven’t deleted past old iPhones off of my account. I’m scared to delete iCloud data although my phone is backed up. I’m frustrated and hitting dead ends everywhere. Following are screenshots of the steps it keeps taking me through