A cutting tool includes a two-way indexable cutting insert clamped in a transversely oriented insert receiving pocket of an insert holder. The insert holder includes a forwardly located insert mounting portion that includes upper and lower jaws which together define the insert receiving pocket having a pocket front opening. The lower jaw includes a pocket lower clamping surface. The upper jaw includes a pocket upper clamping surface which faces mutually towards the pocket lower clamping surface and a pocket stopper surface facing generally towards the pocket front opening. The pocket stopper surface is closer to the pocket lower clamping surface and further from the pocket front opening, than the pocket upper clamping surface. The pocket stopper surface is further from the pocket rear opening than the pocket lower clamping surface.