^ Replacing the pipe might also give you the opportunity to run it in a less conspicious place although looks like you also have a gas pipe running along the same wall?
On the proofing/breathability front it depends what you intend to use the space for. For storage etc I would be tempted to seal it up or else whatever you are storing will get moldy/mildewing over time. Not too familiar with brick sealants but imagine you can probably get a breathable one.
^ Replacing the pipe might also give you the opportunity to run it in a less conspicious place although looks like you also have a gas pipe running along the same wall?
On the proofing/breathability front it depends what you intend to use the space for. For storage etc I would be tempted to seal it up or else whatever you are storing will get moldy/mildewing over time. Not too familiar with brick sealants but imagine you can probably get a breathable one.