While this issue isn't a problem with my main phone, I am using a loaner phone while mine is being repaired. and when it drops to 15% or you turn on energy saver it disables the GPS antenna when the phone screen is off. The model is a HTC One M9 (Android 7.0; December 1, 2016 Security Patch; Software number 4.20.631.1).
I went for a walk and kept grabbing my phone out of my pocket flicking on the screen and checking GPS settings, since the lock indicator on the watch was red, to make it go green. Then putting my phone back in my pocket and having my watch turn red. The only solution was to disable the battery saver (or I guess turn the phone off), so I could continue using the phone's GPS. I'm likely not the only user with an issue with this. It would be nice to have a preference to only use the watch's GPS or to fail over to it if the phone doesn't find a GPS connection in a certain period of time (i.e. 2 minutes).
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Thanks for your feedback! However, it is impossible to choose whether use phone's GPS or the watch's GPS during Bluetooth connection.