what would cause the outdoor temp to climb 5-10C above the correct reading?

Recently, I noticed the outdoor temp as shown in the instrument cluster sometimes climbs as high as 45C when the outside temp is actually closer to 35C. The last 2 times, I noticed it was happening when I was in a parking garage or stop-go traffic. Sometimes it drops after I get moving at 30-40MPH, but not always.

The car seems to be running fine and the coolant temp gauge is steady. Any thoughts?

the sensor is on the front of the radiator, attached to the power steering cooling line. maybe a loose wire, or not attached correctly somehow?

The sensor is merely producing a voltage in proportion to the localized air temperature. This will only be a true ambient reading if the car is moving or if the car itself is not warmer than the ambient temperature.

I have seen the indicated reading many times show a temperature that is warmer than ambient in the summer time if the car has been parked in the sun for a few hours. The reading will then slowly drop to ambient over several minutes once you start driving. The changes in readings will be slow as the sensor itself does have a thermal mass and a time constant associated with it.

Unless the indicated temperature is jumping around or significantly different from what you figure it should be after you have been driving for a while, I would not be concerned.