Yes, apparently it's a taunt by 'English' (probably mostly Welsh) longbowmen from the Hundred Years War (Agincourt, the Plantagenets etc), due to the French's penchant for cutting off the two bowstring fingers of any archers they captured (thus nullifying them for future wars).
It's a V though, with the knuckles pointing towards the intended victim. It's why Churchill's 'V for Victory' gesture you'll have seen in WW2 images is made with the palm facing outwards.
And yes it basically means '**** off' in modern day England.