By reading only this sentence, we can figure out very little about Joe, Pip or the society in which they live. However, based on the evidence I would say that the only possible answer is: Joe's tragic background.
We can figure this out by the fact that he doesn't know how to read and the insistence on his ability to do it. If someone can't read, it is probably due to the lack of opportunities to be educated in a proper way, meaning that he had more important things to do than to study, maybe work for a living. We can infer that Joe comes from the lower class with little or none access to formal education, facing up the different problems this carries.
In a lower class society, sometimes weaknesses must not be shown as the weak perish. One way Joe does this is by not accepting he can't read. In conclusion, this sentence gives us some clues to infer that Joe has had a tragic backround in which he is used to fight for his life.
