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My Weaponsmith will be reaching 5th Circle soon. Looking forward at the Travelling Smithy power, it says I burn 1 Strain per hour of work.

The Craft Skills and Forge Weapon Talent measure in days. The Forge Armor Talent in weeks.

I assume 8 hour work days are what is expected here, correct?
Is it possible to work overtime?
What happens if you're interrupted in the middle of a project?

Yes 8 hours. Overtime can be handled just like when traveling, via Fatigue (GM Guide). They also should essentially add up, e.g. 8 hours walking + 8 hours forging = 8 hours overtime.
Interruptions aren't a problem except your fire may go out or your steel may go cold, and you'll have to spend some time to get things going again. Just like in a regular Forge. Mostly, it's not worth mentioning. Also, you're perfectly fine doing a lunch break or going into the bushes. ^^

Thanks for the confirmation. Sounds more like an Instant Forge than a Travelling one.

By interruptions I meant stopping work for a day or more. I could see Crafting not having an issue, but the magic of Forge Weapon/Armor may need to be consistent work days.

Oh, that. I don't think it should be much of an issue except if it were weeks between working on an item.
This might either indicate some form of abuse and/or attempt to squeeze the little last bit of time into producing items you don't really need, or the GM not providing enough opportunity for downtime forging. It stops being a pure rules issue at that point, however.