How do I fix horizontal photo orientation issue in the Photos app?

Did you already try to force restart your iPhone after the recent iOS update?

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1. Press and quickly release the volume up button.
2. Press and quickly release the volume down button.
3. Press and hold the side button.
4. When the Apple logo appears, release the side button.

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copied from: Force restart iPhone - Apple Support

Then try again to take a photo in landscape and portrait mode.

If the issue still exists, you should use the Feedback link to report this directly to Apple Techs.

Feedback - iPhone - Apple

You should also contact the official Apple Support, they can diagnose your device online:

Contact Apple Support - Apple Support

As Ingo2711 suggests, a forced restart is a good thing to try.

The thing is, this picture is taken with the camera pointed downward, and that sometimes confuses the camera in trying to decide which direction you want to be "up." You may have to go to Photos edit mode, and then you can change the orientation. You have to go to Crop adjustments

and you can use the rotate tool.

What seems weird to me is that the picture uses the short side as vertical, up. That seems to imply to me that you had the short side of the camera pointed more to the sky, but I'm not sure. Do you have Portrait mode turned on? That can force "portrait" orientation, though not always.

In the Control Panel, accessed with a downward swipe from the upper left corner,

you can turn off "Portrait " orientation for the phone as a whole, if it is locked--as in the picture above.

Let us know what you find…