Q: What did one pencil say to the other pencil?
A: You’re looking sharp!

Explanation:  When the writing end of a pencil is pointed, we say that the pencil is sharp (the non-writing end is the eraser).

When someone is wearing nice clothes we say that the person is looking sharp; it is a phrase used most often to describe men.  “Looking sharp” can also be used for someone doing something well as in this news article about a soccer player.

This joke is funny because it plays with the double meaning of “looking sharp.”

Here is Joe Jackson singing about looking sharp:

And Gillette with Look Sharp, Be Sharp: