The datasheet you linked to shows the terminal voltage could be close to 4.5v at a charge rate of 0.3C, and starts at around 4.2v on the discharge curves. 1.25v is simply the nominal NiMh cell voltage, it varies significantly from fully charged to full discharged.
This is the same as Li-ion cells being rated at 3.7v when they vary between ~3.0 to 4.2v depending on load and state of charge.