If you are talking about the desktop version, it's possible to remove the password by leaving the new password field empty.
When I type my current password, and let the new password as empty, on desktop, Electrum gives me this
"Password is disabled, this wallet is not protected".
And I did not believe that what you said, when a wallet is encrypted, it is encrypted forever, I tried to open it again, in Electrum desktop, it default opens a latest wallet I opened before. Hence, it opened the emptied-password wallet without any typing a password step.
I see it becomes a no password wallet, and it no longer is encrypted.
I think if OP wants, OP can delete that encrypted watch only wallet, and create a new one without a password.