this post was submitted on 10 Nov 2023
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I have this issue once in the past and I need to reset sync data to fix it.
Try this: Go to Watch app on iphone > General > Reset > Reset Sync Data.
After press that, it'll seem like nothing happens. But after a few minutes, the names for imessage chats shows up instead of phone numbers.
Give it a try and see if it fixes your issue too.