A cutting tool (20) includes a two-way indexable cutting insert (22) clamped in a transversely oriented insert receiving pocket (46) of an insert holder (24). The insert holder (24) includes a forwardly located insert mounting portion (32) that includes upper and lower jaws (34, 36) which together define the insert receiving pocket (46) having a pocket front opening (52a). The lower jaw (36) includes a pocket lower clamping surface (54). The upper jaw (34) includes a pocket upper clamping surface (60) which faces mutually towards the pocket lower clamping surface (54) and a pocket stopper surface (68) facing generally towards the pocket front opening (52a). The pocket stopper surface (68) is closer to the pocket lower clamping surface (54) and further from the pocket front opening (52a), than the pocket upper clamping surface (60). The pocket stopper surface (68) is further from the pocket rear opening (52b) than the pocket lower clamping surface (54).