Why is the jquery_update module not supporting the latest jQuery version?
You'll want to use the latest dev version of jQuery update, 7.x-3.x-dev to get the latest version of jQuery, or at least jQuery 3.1.  See this drupal issue for more insight. 

You can see in the 7.x-3.x dev branch, it has jQuery 3.1. 

Note, there is also a patch for jQuery 3.2, 3.3, and 3.4 against the 7.x-2.7 branch.