Avowed seems to have been upgraded to Unreal Engine 5
Obsidian Entertainment is now working with Epic Games' very powerful Unreal Engine 5...
During Microsoft's first real dedicated Xbox Series X event with mainly first party content back in 2020, several games that still haven't been released was announced. Two of them are Avowed and Fable, which hasn't seen any sign of life since then.
While we still technically haven't got official information about Avowed, at least we now know that Obsidian Entertainment seems to have decided to upgrade the game engine to Unreal Engine 5. The reason we know this is thanks to the LinkedIn profile of Aaron Dubois, who is Lead VFX artist at Obsidian Entertainment. He specifically writes that he is currently "Lead VFX artist on Avowed. Working with Niagara fx in unreal 5."
While Obsidian Entertainment has worked with both CryEngine and Unity previously, they have used Unreal Engine 4 for both Grounded and The Outer Worlds. Therefore most people assumed they would upgrade eventually, but it is of course good news that they already seems to have moved in this direction.