Celtic ou- became Welsh w- in this instance.
Of course, there is the outside chance that Welsh
wy is related after all to Irish og (gen. oge), for if the root was *ogion (and
not Pokorny's *ouion), this would produce an Old Welsh *eui which could
lead to the spelling wy (just as *Ogm-io became Old Welsh Eu(u)-ydd - note that
the -m- is lenited in Welsh to a -u- which is coalesced with the -u- in Eu- from
*Og-).
-C. Gwinn