They were first called Feedback when they formed in 1976, a clear rock-oriented name. In 1978 they became The Hype but a punk friend told them this was a rubbish name for a band (maybe not in those exact words), at which point somebody suggested U2 because it was a spy plane, a submarine and had an air of inclusivity about it (you too). So like many band names, it just sounded good at the time.
And in passing, Paul Hewson named himself Bono after a sign advertising Bono Vox hearing aids (Bono Vox means beautiful voice in Latin). https://en.wikipedia.org/wiki/U2_%28band%29
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