Compact Galactic binaries where at least one member is a white dwarf (WD) or neutron star constitute the majority of individually detectable sources for future low-frequency space-based gravitational-wave (GW) observatories; they also form an unresolved continuum, the dominant Galactic foreground at frequencies below a few mHz. Due to the paucity of electromagnetic observations, the majority of studies of Galactic-binary populations so far have been based on population-synthesis simulations. However, recent surveys have reported several new detections of WD binaries, providing new constraints for population estimates. In this article, we evaluate the impact of revised local densities of interacting WD binaries on future GW observations. Specifically, we consider five scenarios that explain these densities with different assumptions on the formation of interacting systems; we simulate corresponding populations of detached and interacting WD binaries; we estimate the number of individually detectable GW sources and the magnitude of the confusion-noise foreground, as observed by space-based detectors with 5 and 1 Mkm arms. We confirm earlier estimates of thousands of detached-binary detections, but project only a few ten to a few hundred detections of interacting systems. This reduction is partly due to our assessment of detection prospects, based on the iterative identification and subtraction of bright sources with respect to both instrument and confusion noise. We also confirm earlier estimates for the confusion-noise foreground, except in one scenario that explains smaller local densities of interacting systems with smaller numbers of progenitor detached systems.
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