Do the 49C trick to confirm the real live reading of the engine temperature via the climate control:
* Press re-circulating air and then de-mist up arrow simultaneously.
* Turn temperature control knob until 49C is displayed.
* Press re-circulating air to display reading.
* Press re-circulating air and up arrow again to cancel.
Your needle dash gauge shows a software weighted figure that sits at a re-assuring 90 deg C. normally and only departs when the 49C figure is significantly different (>10 deg C.).
If the two readings (dashpod temperature needle, and 49C) agree, then it rules out the possibility that your dashpod is at fault which can happen! Bear in mind the software weighting. Here are some examples:
.... 49C = 82 deg C. then the dashpod should read 90 deg C.
.... 49C = 75 deg C. then the dashpod should read 75 deg C.
.... 49C = 105 deg C. then the dashpod should read 105 deg C.
.... 49C = 90 deg C. and the dashpod = 100 deg C. then you have a faulty dashpod
.... 49C = 93 deg C. and the dashpod = 80 deg C then you have a faulty dashpod
.... 49C = 75 deg C. and the dashpod = 75 deg C. then you have either a faulty sensor or thermostat.
If your temperature is low, e.g. 75 deg C. then this generally indicates you need a new thermostat and it's sticking open. You can often see the temperature fall on a long overrun when no petrol is being burnt but the radiator is still cooling the engine. BUT check the water temperature with a thermometer to confirm the water temperature is real and not a faulty sensor!
If 49C is fine, a high or low needle reading is going to be caused by a faulty dashpod.
If 49C shows too hot as well as the needle gauge it's more likely to be a stuck thermostat or failed waterpump, collapsed hose, non functioning fan etc.
Bear in mind that when stuck in traffic and with no airflow the engine temperature will normally climb until the radiator fan cuts in at ~100 deg C. on it's own thermostatic switch and brings the temperature down. The temperature will cycle up and down like this with the fan turning on and off, unless alternative airflow is resumed by the car moving, or, if you have the air conditioning turned on, which has its own fan and creates independent airflow if it's cooling the cabin.
Another thing to bear in mind is that there are two temperature sensors in the same screw in sensor unit on the engine. One sensor (G2) feeds the needle gauge and one (G62) feeds the ECU. G2 is also read by the climate control as 49C. There has been some confusion and misinformation about this: 49C does NOT read the ECU sensor and 51C does NOT represent the equivalent of the dashpod software weighted 49C reading. Ignore 51C.