Euro sinks to two-year low under $1.25

The euro dived below $1.25 on Friday for the first time for more than two years, driven by speculation that the US Federal Reserve could cut interest rates sooner than expected.

At about 1330 GMT, the European single currency fell as low as $1.2486, touching the lowest level since late August 2012.

"The weakness in the euro is more of a strong dollar story," said Nick Stamenkovic, macro strategist at RIA Capital Markets.

"The dollar has appreciated against the euro and particularly the yen ... as the Fed slowly but surely heads towards raising rates during 2015."

Official data showed on Thursday that the US economy, the world's biggest, grew at an annualised 3.5 percent in July-September. That smashed expectations for a 3.0-percent rise.

The reading, coupled with upbeat comments about the jobs market from the Fed, stoked speculation that the bank could hike interest rates earlier than its timetabled mid-2015 date.