I think John Freeman is right, but then the question arises as to why we pronounce -/k/, since the French -ch -/∫/ is in imitation of the German -/ç/-.

I searched through MGH for the earliest mention of Munich, and it seems to be

... nostrum Henricum ducem Bawarie et Saxonie super foro apud Verigen et Munichen dinoscitur agitari   

in a charter of Friedrich I in 1158.  It is treated as a dative plural, as if meaning 'at the monks', but could that be a re-interpretation of something completely different?

The Italian form Monaco is also in need of explanation, since it would be literally 'monk' if it were not feminine.    What is the gender of the French Munich?

Keith

PS apologies for straying from English names.